Tom Walpole, CPA PFS joined Katrina Irwin on News 8 at Sunrise Monday to talk about children and money.
He says it is never too early to start teaching them responsible spending.
When do you start talking to kids about money?
- It isn't so much a talk as it is a learning experience or a culture.
- Children should go out shopping with parents and see that different things have different prices. Children should also NOT get something every time they go out shopping. They should hear and understand the terms `treat' and `reward' so that when something is purchased for them it is not just something that always happens.
- Pay for some items with cash so the child sees actual currency and they will likely ask "What's that?" and the parent can explain the exchange process. Let them see different denominations. Credit cards and debit cards don't have a value printed on them, but bills and coins do.
- By not purchasing something every time, the child doesn't develop an expectation and won't necessarily cause a scene when denied an item.
What about allowances? Should they be tied to doing chores?
- That can be a personal preference with the parents.
- It is important is to be consistent.
- If it is not tied to chores, then avoid the `advances' on next week's allowance. When the allowance is gone, the child should wait until the next `pay day'. Let children know, "If you spend all your allowance now on that toy, you won't have any later when the ice cream truck comes by."
- If it is tied to doing chores, then be sure the chores are done and done properly. This will help teach responsibility and also develop a work ethic. `Bonuses' can be given if extra work is done.
What about savings?
- Encourage savings.
- Feed the Pig!! Get them a bank and they can put in some of their allowance each week and use it for something big later.
- Lead by example and have `Family Savings' (as easy as a jar with a picture of a pig or something on it). Set a goal, like going to Darien Lake. Put a dollar amount on it as a goal. All family members can and should contribute. Every few days count the money and see how close you are to "Goal". You can even chart it.