We all make stupid money mistakes. Find out if you're making bad money decisions with this advice from Kodak spokesperson and money expert Laura Rowley.
1. Becoming a Human ATM Machine
Give children an allowance and let them know what they have to pay
for out of their own stash—whether it's the ice cream truck,
the goodies in the $1 aisle at the discount store or that
Scholastic book order form that comes home from school. This
reduces nagging, allows them to develop math skills and learn from
their mistakes. It's amazing to see how much more they value
the things they paid for themselves.
2. Overlooking Every Day Lessons
Don't miss opportunities to discuss simple economics in every
day settings. While grocery shopping, explain why it's smarter
to choose the package that costs less per pound, or the more
affordable generic brand; and why it makes sense to stock up when an item is on sale. Explain why
savvy savings habits make sense: "By saving just $15 a week
using the grocery store's loyalty cards and coupons, we'll
have almost $800 at the end of the year to spend on something
fun."
3. Not Involving Kids in Longer-Term Goals
Solid money management comes down to two things, planning ahead and
making choices. If you're planning a vacation, talk to the kids
about the budget: airfare, lodging and entertainment. Take a coffee
can and label it the "Vacation Fund" and throw in your loose change at
the end of the day. Take the coins to the bank and show the kids
how the money is adding up; and how the bank will pay you interest
for storing the cash in a savings account. Give them a specific
budget for souvenirs—say $15—and suggest they increase it by
earning cash for the trip through lemonade stands, dog sitting or
lawn mowing.
4. Missing the Opportunity to Motivate Their Savings
Habits
If your kids put money in the bank, match their contributions. I
took my kids to our local bank branch when they were 8, 6 and 4 and
opened savings accounts for all of them. I matched the
money they deposited, using the opportunity to discuss how a 401(k)
plan works and why someone should contribute up to the amount of
the company match (free money!).
5. Not Explaining How Plastic Works
According to a study by Nellie Mae, the student loan firm, the
average college freshman has $1,500 in credit card debt, and that
figure doubles by the time they graduate. Some 56 percent of
college seniors carry four or more credit cards. That's when
the real trouble starts, because if teens lose the battle to
understand and manage credit cards at 18, the damage can haunt them
for years. An estimated 70 percent of employers check credit scores
before they hire. Over time, a low credit score will suck tens of
thousands of dollars out of your child's pocket when they seek
financing for an auto or a home. Consider allowing a teen to practice with
a pre-paid, reloadable debit card such as Visa Buxx. It has fewer
fees than competing cards and features parental controls—such as
setting a weekly cash limit. Parents can also get email alerts
showing when and where a teen used the card, setting the stage for
discussions about wise spending.
Do you have any fail-proof methods for talking money with your children? Chime in here and share your techniques!
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