Teach Kids to Save
Adapted from: http://childcare.about.com/od/volunteerism/a/financialhelp.htm
In the consumer society we now live, kids start asking for money at an early age. At first, it is an allowance, but soon it may be a request for a debit or even a credit card. When should kids start receiving financial incentives? Janet Bodnar, executive director of Kiplinger's Personal Finance, offers a timeline for your child's financial development.
- Preschool means savings. Kids this age can be taught to "save" money, but need to literally see it to understand the concept. Adding weekly quarters to a piggy bank, for example, is much more effective than saving money in the bank, where kids think it disappears.
- Elementary kids should open a savings account. By this age, kids can understand the benefit of having a savings account and you can teach them responsibility, basic math facts and, maybe, even the concept of interest.
- Working teens need a checking account. If your teen is old enough and responsible enough to have a regular paying job, then it's time to open his/her own checking account. The benefit is that kids can learn about the rewards and consequences that come with a checking account, and learn responsibility for balancing their checkbook and being responsible for their own money.
- College-bound students need financial independence. If your child didn't get a checking account before now, be sure to open one BEFORE he leaves to college, and then take the time to teach basic financial responsibility concepts. Don't assume your child knows; probably he doesn't. The account should offer an ATM/debit card also.
- The final year in college is a good time to get a credit card, as long as the notion of job and lifestyle independence is clearly set. Otherwise, the illusion of easy money could have disastrous results.