Tips for parents: Teach kids about money

"If, for example, parents give in to a child's wants - or whims - the child may fail to learn the value in saving for a special item," she said.

"We're becoming a cash-less society - paychecks are direct-deposited and bills are paid by check or auto bill-pay programs," she said. "Children who see their parents pay with a check or credit card may think the pot of money is, magically, unending.

"Kids need to see how their parents handle the money process. Seeing a parent make a deposit or pay bills by check or on the computer is part of the learning process. Explain (briefly) what you're doing - and how it works: `I have to put money in my account so I can write a check next week.' or `I'm depositing money in savings for our vacation.'"

To encourage children to save, Young advised giving the child the freedom to spend some of his or her money on things he or she chooses, right or wrong.

If a child has the proverbial piggy bank, open the bank occasionally and take advantage of the opportunity to talk - not preach - about money management, she said. Encourage the `save some, share some and then spend some' philosophy and then let them do just that.

"Forcing a child to save all of his or her money may result in resentment or impulsive spending," said Young, who offered tips for parents to encourage children to save:

• Talk with the child about his or her wants or goals such as a new bicycle, summer camp or new electronic device.

• Encourage discussion and/or decision-making to determine the savings priority, which item is most important to the child.

• Explore with the child possible ways to save for a goal.

• Set aside some one-on-one time to check costs and compute the savings needed. For example, help the child divide his or her planned savings into the purchase price to compute the number of weeks it will take to reach their goal and make the purchase.

• If a big-ticket item, parents may want to offer a matching savings incentive.

• Celebrate when the goal is reached but also take time to set a new goal.

"Encouraging a child to make some charitable contributions can help a child learn compassion for others who have less and gratitude for what he or she has," Young said. "News reports about children selling lemonade to raise money for hurricane relief demonstrate that relatively young children can learn compassion and reach out to others.

"Everyone makes money mistakes, but learning to make mistakes early, perhaps with a few dollars, may spare a child from making more costly mistakes later in life," Young said.

For more information on money management, Kansans can contact the county or district K-State Research and Extension office or visit Extension's financial management Web site: www.oznet.ksu.edu/financialmanagement/.