Future Economic Rock Stars?

With our current black hole economy, and the wild chaos with banks, mortgages and credit cards, it’s the perfect time to teach our kids (and ourselves) to avoid financial disasters in their futures.

I recently jumped at the chance to interview a family financial volunteer expert from LifeTuner.org.

LifeTuner,  a non-profit site dedicated to helping people of all ages make smarter financial choices today for a better life tomorrow, and is brought to you by AARP (www.aarp.org).

I asked a million questions, and lucky for me, Denise LaBuda had plenty of answers!

• How early should we start teaching and talking with our children about money?

Denise: (in pink)

“Money training should start when children are young — by early elementary school age when money habits are being formed. We encourage parents to think of their kids childhood years as a money apprenticeship. From pre-school until high school graduation, with parental guidance, children have a chance to practice using money with minimal risk. And with responsibility for making independent money decisions (with room for making mistakes), children can learn that money is just a tool.”

I totally think it’s a great idea to think about our children as mini money apprentices! I teach my girls to cook, and sew, why not look at financial skills as tools as well?

• Should parents pay allowance, if so how much? And should mom have a say in how much the child saves and/or spends?

“YES! Kids need to have money to learn how to save it, spend it wisely and share it with those less fortunate. We recommend parents take a portion of the money they already spend on their kids, and reallocate the decision making to their kids, including decision making on spending, saving, planning and sharing.”

We start with 5 yr olds. Each kid, regardless of age, needs to learn that money comes in, gets planned for/allocated to, and goes out. Parents set the rules and let the kids go. As kids become ready for more responsibility, the allowance grows as do the things they are responsible for…”

• What types of items do you let kids purchase for themselves after saving up? And what activities do you ‘allow’ kids to pay for?

“We recommend kids be responsible for some of their wants when they are very young. When they become Tweens, it is ok to expand their money management responsibilities to include paying for some of their needs – namely a portion of back to school money, vacations, holiday/birthdays. By the time they are Teens, they can have even more responsibility (pre 16) to manage a clothing and phone allowance, etc. 16+, they should participate in learning about all the costs associated with running the house (food, gas, electricity, car maintenance) so when they are ready to graduate from high school they know how to manage a full household budget.”

I’m already completely on board with paying an allowance, and permitting partial responsibility for their own their wants/needs. It’s parent smart to think about your children as trainees in the game of life. If they don’t practice these cash skills early how will they really learn?

As a mom my main goal is the happiness of my children, and imagining a young adult unleashed on college, or starting married life without an understanding of how money works is crazy scary to think about!

I’d rather envision my child becoming a financial celebrity!
Thanks Denise for your advice and thoughts.

Next week: Part II:
Teaching Tweens how to SPEND well…
(Credit cards for a kid! Really? Check back to see what Denise suggests!)

About Denise LaBuda:

As founder & CEO of the Economic Independence Group (EIG), Denise LaBuda directs development, distribution and sales of educational products and services to help parents, businesses, teachers and non-profit organizations provide children with strong financial education.  EIG offers Money wizdom workshops, products, and content licensing to support the development of money skills and habits in all children. She is also a volunteer expert on LifeTuner.org

Carissa received no compensation for interviewing & writing this article.