Teaching Kids About Money

A former investment strategist is offering families tips on teaching your kids about money:

1. Don't let money be invisible. Today money comes out of ATM's and is spent with debit and credit cards - invisible to kids as to where it comes from and where it goes. When a parent can't afford a toy or game, many kids will answer "Why can't you just buy it with your credit card?" Placing a whiteboard on the wall that shows the monthly expenses may provide a frame of reference for children who may not understand the value of a dollar or how much basic needs cost today.

2. Give kids responsibility for spending. If your kids receive an allowance, or you reward them with money for good grades, then you should require them to map out the money they have coming in and also where it goes. Seeing it on paper or in a computer chart will give them a sense of reality about their money and also build healthy financial habits for later in life.

3. Teach the power of investment. Parents should spell out the value of an investment. For example, $100 in a basic savings account can result in a balance of $12,000 after 20 years. But if they invest that same $100 in a bond or a stock that returns 6% a year, they could have $42,000 after 20 years.

4. For love or money? Ask your kids what they are passionate about and what they are good at. The answers to those questions will lead to a happier life and a better quality of life than one centered on the pursuit of the almighty dollar. If you stress lasting fulfillment over financial rewards, more than likely your children will wind up with both in their life and career.