Help your kids with money smarts!
Today I came across a very good and helpful article by Marshall Loeb. In here, Loeb talks about making the kids 'money smart'.
The Jump$tart Coalition for Personal Finance and Literacy reports that in its most recent test of high school seniors' money literacy, the average score was a barely passing 52.4%.
Thus, Loeb has given five tips to help your kid in earning an 'A' in money matters. They are:
Don't reward good grades with money. Janet Bodnar, author of "Raising Money Smart Kids," says that "buying grades" distracts children from the real reward -- the sense of accomplishment they should feel. It's OK to use it as a motivator in small amounts over limited periods of time, but it should never be the primary reward.
Use an allowance. An allowance is still one of the best ways to teach kinds about managing money. It helps them distinguish their needs, wants, and demonstrates the power of saving. Work out a regular schedule and stick with it -- and let your child know in advance when she will have an "annual allowance review."
Incentive pay. Encourage kids to save money by rewarding their efforts. Set up a matching program -- for every dollar your child saves, offer to put down anywhere from 5 cents to another dollar for it. Such incentives encourage children to save, which can develop into a lifelong habit.
Don't keep your kids in the dark about costs. While it may seem polite to not discuss money, you're doing your children a disservice. Share the restaurant check with them, or talk about how much gas costs each month. If you shield them from costs, you may prevent them from being able to manage their own money when they have to.
Have an idea of what your child spends money on. You don't need to account for every penny, but you should have a general sense of how they spend their allowance or earnings. It will help you anticipate future problems and keep them from spending (or saving) too much.
