Your Children and their Personal Finance Skills
November 01, 2012

By Chris Minasian

It’s that time of year--kids are back in school and have much to learn!

We know this economy has greatly affected children and their beliefs about college, their future careers and how spending money affects them.

Do you know the majority of teenagers would rather learn about money management in the classroom or from their parents than going out in the real world? Unfortunately, less than 20 percent of teachers feel competent to teach personal finance. Only 22 states require students to take a high school economics course.

The PricewaterhouseCoopers accounting firm is spending millions of dollars on this topic for the classroom. You can read about the program at

We know children may face a number of money challenges. For example, credit card debt, wants versus needs, etc. Isn’t it parents’ job to teach them one of the most important lessons:

Live within their means…

What does that exactly mean? It means spending less than they earn throughout their lifetime. It involves learning to postpone purchases, save for a rainy day and generally feel happier than peers who seek immediate gratification. Those with excessive debt feel pressure, stress and overall unhappiness with their positions in life.

Recent surveys show the average college student who graduated in 2010 owed $25,250, and the average family owes $15,956 in credit card debt. Most of this debt comes from spending on non-essential items, such as the latest and greatest cell phones, electronics and clothes.

Since 2007, children’s knowledge of money management has declined significantly..

Here are some things parents can do to help their children become better financial planners:

• Start them as young as 8 years old with an allowance for weekly chores. Teach them to save one-third, spend one-third on their wish lists and donate one-third to charity or their church. This encourages a lifelong habit of saving money before spending money!

• Set up bank accounts in their names so they see money going into the accounts. Encourage saving family gifts into such accounts as well. You can check current interest rates at

• Do not be afraid to tell children “we cannot afford it right now.” This fosters a belief of delayed gratification, and most times their “wishes” change as time passes.

• Explain as early as grade school what the stock market is and how money grows over time with regular investments. They can “own” part of a business with each stock.

• Encourage your child at as young as 10 years old to start a small business to earn money. It could be babysitting younger children or walking a neighbor’s dog.

• Discourage using credit cards unless they can afford to pay the balance every month. Explain how interest accumulates on purchases and what an item actually costs with interest.

Children learn best by watching their parents’ financial behaviors.

“Early training in economics and finance will go a long way towards the creation of a stable society in the future.” Henry Kaufman, a renowned economist and author.

Disclaimer: The views expressed in this article are the opinions of the author and should not be interpreted as individualized investment advice. Investment objectives, risk tolerances and the financial situation of individual investors may vary. Please consult your financial and tax advisors before investing.

Susan Templeton

November 2012