For Parents: Teach Children the Financial Facts of Life

We try to teach our kids to be street-smart and use good manners, but teaching them the financial facts of life can be difficult. To help parents, guardians and even grandparents raise responsible money-managers, FDIC Consumer News offers the following suggestions:

• Play "show and tell" while you manage your own money.
  
  Save, spend wisely and share with others.
  Take your child along on shopping trips and discuss what makes some items "too expensive" and others "good buys."
  Take your child to the bank, note the variety of services provided by visiting different departments and explain different principles.
  Discuss your charitable contributions and why you are making them. Ask your child for input on which charities to support.
• Help your child start a savings or investment account.
  
  At around age eight, think about helping your child open a savings account.
  Many parents reward their children for sticking to a savings plan by matching or adding to what the child contributes.
  Discuss the pros and cons of owning investments, such as stocks, bonds and mutual funds. Investments can produce higher returns than bank deposits over the long term, but remember that investments can lose money and they are not insured by the FDIC.
• Give an allowance.
  
  Give an allowance in small bills or coins to allow your child to easily set aside portions for different purposes.
  Encourage your child to decide in advance how much should go into savings, how much should go into the spending pile and how much should be set aside to share with others – for charity, birthday or holiday gifts.
• Consider gifts that encourage saving.
  
  Examples include U.S. Savings Bonds and books that reinforce financial responsibility.
• Encourage older children to get work experience.
  
  Summer or part-time jobs can teach young people good business skills and how to be responsible. They also may enjoy earning and saving money.

The above information is an excerpt taken from a new Federal Deposit Insurance Corporation (FDIC) publication titled, "Money Tips for All Ages: Your Finances at Different Stages in Life." The advice, in a special edition of the agency's quarterly FDIC Consumer News, can be read or printed online at www.fdic.gov/consumers/consumer/news/cnspr08.