Cha - Ching Baby!

Let's talk money. Who doesn't like to talk about money? We all do. Either we love to talk about it because it's stressing us, and our bank accounts, to the max and we're trying to find a way to end that stress or we love to talk about it because we're rolling in it and we want to show everyone what our MONEY MONEY MONEY has bought for us.

But...do you talk to your kids about money? Do you ever say anything besides "No, we can't afford it," or "Sure baby, what ever you want it is yours." Do you discuss savings, checkings, credit cards, college funds, and piggy banks? Do you talk about the economy and what inflation is? Do you teach your child about taxes and loans? If you don't then now is the time to start. It's never to late to talk to your kids about money but it will be to late to talk about it when they begin spending their own money.

It is our responsibility as parents to teach our children to be fiscally responsible and to understand that money does not grow on trees. You can begin that lesson while they're still baking in the oven. You can begin that lesson from the moment you evict them from the womb for not paying anymore rent. You can begin that lesson the moment you give them their first bath to the moment you put that first cent in their college savings account. But it must go beyond just saving for their college education.

Your child can learn about balancing a bank account before they even hit kindergarten. I'm not talking about opening them up an account and handing over the ledger. I am talking about taking a register and getting it copied and blown up so they can see it. Get some funny money from the store and play with them. Teach them that if your account has a one hundred balance in it that they can't go over that. Kids love to play house, dress up, and all kinds of games so why not start playing "store" with them?

Most toy stores carry items like a play cash register, play money, play food, and other items. By purchasing these items you are making a bigger investment than just their college education. You are investing in their financial future and you are saying that you want to teach your child that they can subsist on wages alone and not just on credit cards and paycheck to paycheck. We need to be vigilant in our finances and be responsible so that our children can learn from us. Set the example and all that jazz.

Now I grew up with parents who were less than fiscally responsible and relied on the wonders of welfare to supplement the income they needed to feed five children. It was not unusual for my parents to take us behind a grocery store and pick through the garbage for extra stuff to feed us. Cakes, fruits, ice cream, meat, and many other treasures were found in those dumpsters and we thought nothing of enjoying it because back then no one gave thought to food poisoning and other nasty things you could get from eating "expired" groceries. Garage sale and hand - me - down clothes were common on our backs and the dreaded words "We can't afford it" were often a mantra as we asked for something. That was in the 70s and 80s and the economy and cost of food and clothing is rising with each generation. My parents didn't teach me about saving or needing money for college or how much it costs to keep a home running with basic necessities: water, gas, electric, and mortgage. I knew nothing of those things. Not even when I went out on my own did I understand that paying for things was more than I thought it was. It wasn't just handing over some greenbacks and getting what I needed.

With my kids I've been very open about our financial status, or lack thereof, and how we must not want if a need is a priority. They have all had savings accounts from a very young age and we would save their pennies in banks and once a month make the drive to the bank so they could cash in their change and see what they had for savings. But we went a few steps further and began "taxing" them as well. They had to pay us taxes for their income. We are the IRS in the preTzel household and we tax them for their savings. That many, unbeknownst to them, is deposited in their savings account after they put in their "savings".

This hasn't worked out as well as we hoped because, to be honest, our finances are tight. We do what we can when we can and we give them the "savings" but as their age they realize that those pennies, nickels, dimes, and quarters don't go as far as they did when they were six or seven. Now they're lusting after Iphones, Ipods, and Iwants all the time. Iwants are this: "Mom, I want..." and I usually say "We can't afford that Iwant but if you save your money maybe you can get your own Iwant and you know how those pesky companies are coming out with newer and better Iwants weekly." That usually earns me groans and moans from them but they understand, or at least I hope they do, that to purchase an Iwant they must save their money and wait for it.

We have credit cards in our possession and the kids understand what they are and what they are used for. What they didn't understand was "interest rate" and didn't understand how someone can have a balance of $1000 on a credit card but if they spend $900 of it in a month and don't pay it off that the interest rate adds money to that and then you end up paying back more than you originally spent. So I spent a day playing "credit card" with them and using those phony little cards you get from the credit card companies to let you know you're "pre - approved" for X amount and you should call or go online now to accept that great rate. I made a fake statement on my computer and printed it out to show them they each had a $1000 limit and their interest rate would be 9.9% but if they failed to pay on time I would charge them a $29.00 late fee and if they went over that limit they would pay a $29.00 overage charge. It didn't take long before they quickly understood that credit cards are the spawn of hell and they should avoid them. My youngest son, in all his ten years of wisdom, said "Mom, when I get older I want to have a job as a credit card company. They make a lot of money." Sure they do son. Sure they do.

How about bankruptcy? Should you teach your children what this is or do you hope they never have to understand that ugly word? I say you should teach them what it is and what it entails. But before you do that and before you do all the stuff above explain what a credit score is and what it means in regards to home buying, insurance, and loans. You don't have to start this before kindergarten but it is good to explain this at an early age so they understand it.

Has your head exploded? Is it spinning? Are you on your knees crying to the money gods to save you from this post? If so then the message has gotten through. It is imperative that fiscal responsibility is taught to children and they are shown ways to purchase items without going into major debt or financial ruin from overspending. Oh sure, you're thinking that I'm a nut and who the heck teaches their children this crap...responsible parents do. Even if you're not financially responsible or you find yourself praying a check doesn't clear before your check enters you still have to teach your kids to be better than you are at spending and saving.

Our generation needs to be vigilant in teaching our children this because, let's face it, things are going to get bigger and better and more expensive as time goes on. Where once .50 an hour was gold and $5.00 an hour made you a millionaire it will be much harder for our children to know what rich and millionaire are. They can be fiscally responsible but only if we teach them what it is and what it means and how to go about doing it.

There are a few online tools that can help you and one is the Capital One Financial Education program called Money Wise. It talks about talking to teens about finances, setting financial goals for yourself, good credit and rebuilding your credit, and savings to build wealth. It would be worth your time to go check it out. It would also be worth your time to talk to your banker about opening an account for your child and if their bank has tools to help your child learn about responsible spending, saving, checking, etc. Take the time now to teach your child before you have to take the time to financially save your child when they become an adult. It's not all about saving for their college education because education begins first at home.

Some tips:

Wages: Once your child begins earning an "allowance" give it to them in a paycheck. Give them a wage statement. Take out the taxes and treat it as their "wages". But make sure they earn those wages too and it's not just free money because it is rare that one gets free money.

Taxes: The tax man cometh and even small children can learn about the IRS and what it means to pay taxes.

Tax Return: Every year when you fill out your taxes fill one out for your child at home. Give them a refund or make them pay you for not paying out enough in taxes.

Bonus: If your child does really well in school or does something extra at home without being asked then pay them a bonus. They don't need to be told in advance - make it a surprise.

Health Care: Charge them on their wage statement for health care. It's not free and they can learn about it.

Retirement: Retirement at 10? Are you kidding? No, I'm not. The sooner they start saving for their retirement the better off they will be when they hit their 70s. Social Security is already in trouble and what will it be like when they get older?

You can be as complicated or as simple as you want teaching your kids about money but please don't neglect their financial education as you pay for their public or private education.

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