With all the information that children receive at school, t.v., internet, friends, family and reading; getting an education in finances, credit and saving doesn’t seem to be an area that they are learning or applying to their life.

A recent Capital One 360 poll found that 87% of young people between the ages of 12 to 17 reported knowing at least an average amount about managing finances.  Or not.  According to the study, it also found that 24% of them think a debit card is used to borrow cash.

A Charles Schwab poll found that fewer than a third of teens understand how credit card interest works and four in 10 can’t budget.

Talk to your teen about financial responsibility. Does your money-talk with your teen begin with, “How much do your need?”  If so, this may indicate that there is a need for more understanding to becoming financially responsible and independent.  The more that you talk to your child or teens about money, the better financially prepared they will be as they go off on their own.  It is important to challenge them to be responsible for their own financial actions, while the consequences are not as serious.  Learning to appreciate delayed gratification will set the foundation for the rest of their financial life.

EARNING MONEY:   EARLY ELEMENTARY CHILDREN     To begin teaching financial responsibility, it is recommended that you start at a very early age. That age may vary depending on maturity and understanding.  It’s probably safe to assume that at or around the age of 5 would be a smart time to begin rewarding with an allowance.  A short list of ideas are listed for giving money for work performed younger children.  Do keep in mind that younger children may not do the best job on these tasks, but it’s about responsibility and learning.

• Picking up toys
• Feeding family pet
• Collecting household garbage to be taken out by adult
• Setting dinner table
• Sweeping
• Cleaning toilets
• Tidying their bedroom

I do not personally recommend giving an allowance for the following, because these are not chores. These should be expected to be done without question.

• Brushing teeth
• Eating
• Getting up and out for school and church on time
• Schoolwork / Homework
• Being respectful and minding adults, ie, being good during a photo-shoot should not be rewarded.  We need to be mindful about bribing our children for “good behavior”
• Not being quarrelsome or talking back to parents

EARNING MONEY:  TWEENS & TEENS:  According to CNN Money, there are 4.7 million teens with jobs this year -an increase from last year. According to datacenter.kidscount.org there were 73,583,618 teens less than the age of 18.  That means there are far more teens not working than working.  With that being said, teens and parents need to be creative when finding ways to earn money.  I have compiled of possible tasks:

• Collecting recyclables
• Hosting a garage sale
• Yard work for neighbors or family
• Housework for elderly or infirm neighbors
• Helping neighbors with unloading groceries or clothes from car and putting away
• Tutoring
• Pet sitting or dog walking
• Wash cars
• Become a lifeguard
• Babysitting
• Mowing lawns
• Become the neighborhood’s designated tech support
• Organize a fun run
• Driveway power washing
• Garage cleaning and organizing
• Assisting neighbors, church friends with getting seasonal decor from storage and putting back.  Maybe even helping to decorate, such as hanging outside lights.
• Reselling online

Once your child has money, let’s start with giving back.  If you are teaching your children christian principles, teach them to set aside the very first 10% as tithe.  This is a great biblical teaching and teaches the promises of God.  The next amount set aside is 20% to be deposited into teen’s savings account, by the teen.  As a tween or teen, it is not too early to start a savings account at your local bank or credit union.  Be sure that the account accrues interest.

The 70% that remains should be spent wisely.  Many times your teen may want to purchase a pricey item such as a new cell phone or i-pad.  It may be beneficial to help with matching their contribution.  This will create better spending habits than using a credit card and having them repay it.  Once a teen has learned the art of patience, then introducing a credit card for certain purchases may be safe.

Children need to know how much items cost, from the cost of many grocery items to the clothes they wear.   They need to be taught the value in what you own and what they are being blessed with.  I can’t help but notice how teens throw away so many items of value.  We live in a disposable age where money is even devalued because things are too easy to replace.

A couple of years ago, a high-schooler on the girl’s softball team was not keeping up with her softball glove as they were loading the school bus.  Noticing that the glove was a very nice and pricey one, the coach called her to the side and already knowing what her answer would probably be, he asked, “Do you know how much that glove cost?”  She replied that she had no idea how much it cost, that her parents had purchased the glove for her.  The coach smiled and shook his head.  His point was reality.  Children usually do not place value on items when they were not taught to value them.

Teach your children to take care of what they have.  They may not get another one.  This still rings in my ears, for I heard it many times as a young child.  Because of this message, I still have several items from my childhood because I took care of them.  Many other childhood items I was able to later sell.

I will conclude this blog by saying that this is all about teaching financial responsibility.  Not about having such stringent rules that money becomes a headache and source of arguments.  I often talk to clients in their 20’s and early 30’s that admit they were never taught about budgeting and how to used credit wisely.  It probably has a lot to do with their parent’s not knowing how to teach what they didn’t know.

Do you have credit problems and would like to break the cycle and have a better future for you and your family?  Please call us.   The credit evaluation is always free.  We will need to review all three of your credit reports to give a complete evaluation but we can help you get them for $1.

Remember to lead and challenge your children by example.