Kids and Money

(MoneyWatch)

How can I teach my child to spend wisely?

by Jane Bryant Quinn

Here are some ideas for you to play with:

Treat the supermarket as a school. Give the kids a grocery cart, a list, and $30, and see how far they can make their money stretch. Send them searching the aisles for goods that you have cents-off coupons for. Ask them to pick the best buys.

Don't lie to your kids. Make a clear distinction between what you can't afford and what you don't think is worth paying for. If they still want it, let them save for it. If it violates your principles, just say no.

By their midteens, start giving your kids a sense of what life is like by having them pay the family bills for two or three months. Sit down together with the bills and show them how to write checks to pay for the family's utilities, mortgage, rent, phone, water, doctors, and credit cards. They'll find it instructive to see how fast the bank balance drops. They'll also start getting a better idea of how much it costs to live.

Don't shell out for practically everything your kids want or need. That teaches them nothing except dependency, not to mention the fine art of wheedling. They need to make choices within budget limits to learn adult skills. If they want more than their allowance can buy, they should find a part-time job. Children will spend unlimited amounts of their parents' money, given a chance. They're much more careful with their own.

Use cash. Don't put kids under 16 on your credit cards as authorized users or provide them with prepaid debit cards. They need to learn how to allocate real dollars before they can transfer those skills to plastic. Consider plastic after age 16, to introduce them to credit while their spending is still under your supervision.