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Middle Years (7-12)

Money matters How to teach the importance of a dollar. By Nuran AlteirPublished: September, 2009

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There are few good things that can be said about this recession. However, many can attest to the fact that it has forced families to re-evaluate their priorities and examine their relationships with money.     “We are facing historic unemployment levels, rising taxes, possible inflation and an uncertain economy, to say the least,” says David Russell, a financial advisor with the Northwest Financial Group and father of three boys. “There is no better time to take an active role in money management.”     Children are no exception. All families need to face these challenges together, and children are a part of the family unit; they need to become aware about the realities of money.     Shawn Lefebvre, a financial planner and father of two boys, contends that if children do not learn about money and financial responsibility when they are young, they are not going to have a concept of, or respect for, it when they are older.     Lefebvre says that parents should introduce money concepts to kids once they begin to learn through examples and actions.     Take your kids on errands or trips to the grocery store. These can be teaching moments in which you show them how to read store tags, compare prices and determine cost per unit. Make the most of these opportunities for math and life lessons.     Give your child an allowance and encourage her to discuss what the money can be used for, how much she would like to save and perhaps why she would want to save.     Andy Read of Temecula says he gives his 6-year-old son an allowance and teaches him that he has to make choices with that money.     “He has spent his money on things and then later realized he wanted something else instead of, or in addition to, what he just got,” Read says.        Russell has a different take on allowance for his sons. His oldest son receives a monthly allowance and is advised to save 40 percent and give 20 percent to charity; the remaining 40 percent can be spent.     “Often, they will want something to buy, and you can help them work through the math to determine how to reach that goal,” Russell says.     Opening a savings account is very beneficial. It’s an opportunity for kids to watch their savings grow through interest.     “The earlier you can teach a child about earning interest versus paying it, the better prepared they will be to manage their own money,” according to MoneyInstructor.com.     At Wells Fargo Bank, parents can benefit from a savings account, too, because they will be provided with access to transfer allowances and free online statements in order to teach money management.     If you are a Wells Fargo customer who has had an account open for more than 60 days, you may accompany your child to open an account along with one of the following: a child’s Social Security card, birth certificate, immunization record, school photo ID or passport/alien ID.     Wells Fargo also offers an educational program called Hands On Banking. Each session is designed specifically for the child’s age group.     Your kids can also be part of a savings club, which is designed to teach children the benefits of saving while earning awards. This program is available at participating banking locations.     Being smart with money isn’t limited to only saving funds; it’s also about knowing how to spend money. As your kids grow older, they will want to buy more things. How do you teach them to be smart consumers?     Once kids approach their teen years, their parents are often tempted to offer them a credit card, but are they ready for one?     “If proper money management is consistently taught at home from the ‘want stage’ in our children, they will more often be more conservative and responsible than if it isn’t taught,” says Russell.     Other ways you can educate your children is by sending them to financial education Web sites such as You Are Here, a government-affiliated site that teaches kids – in a fun way – how to be smart consumers. Intended for 5th- through 8th-graders, You Are Here consists of games and conversations between characters.   Nuran Alteir is an intern at OC Family magazine. SAVING FOR COLLEGE: IT'S NEVER TOO EARLY “There are many different options for college savings,” says David Russell, of Northwest Financial Group. “There are 529 plans, tax-deferred savings vehicles for parents wanting to invest in their children’s education.”     College America and Future Scholar allow tax-deferred contributions, growth, and distributions on education-related expenses for the beneficiary and/or blood relative, if need be.     These are held and directed in the name of the custodian but may only be used for the beneficiary, which may or may not be changed. Tax advantages, if any, vary from state to state.     Many investors prefer UTMA or UGMA accounts, which offer more investment choices or a more active style of management. However, these plans automatically become the custody of the beneficiary when he or she reaches a certain age, and do not have to be used for education purposes. Source: David Russell, Northwest Financial Group

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