Raising Money Smart Kids

Many children get failing grades when it comes to basic financial skills. And, one of the reasons is that their parents don't teach them.

"Many parents feel uncomfortable talking to their children about money and avoid the subject altogether," said Kim Womack, director of education for CCCS of South Texas, a non-profit Neighborhood Financial Care Center that provides credit counseling, debt repayment plans, and education.

Their teachers appear to be avoiding the subject, too, because a study by the National Council on Economic Education showed that most students still lack basic money management skills by the time they get to high school.

"Parents can make a big difference in their children's lives by taking the time to explain the importance of setting financial goals, of establishing budgets and of routine savings so children can reach their financial goals," Womack said.

Here are suggestions from CCCS that parents can use to raise money smart children:

1. Walk the walk. Show your children what it means to be fiscally responsible. Pay your bills on time, compare prices when making purchases and limit your use of borrowed money. All the lectures in the world are for naught if children see their parents arguing over past due bills or large credit card bills.

2. Teach the difference between needs and wants. Needs are the necessities of life like food, clothing and shelter. Wants, on the other hand, are discretionary items like compact discs, concert tickets and custom tee-shirts. Children, at an early age, need to be shown what families need to succeed and what they can do without.

3. Get children savings accounts of their own. Jumpstart a child's financial training by opening a savings account in his or her name. Use the account to introduce your child to interest, record keeping and routine savings. Children will be surprised how fast their accounts grow when they deposit their holiday checks and birthday cash.

4. Pay children for extra work. Give children an allowance for doing yard work, cleaning the dishes and other family chores. It should be big enough so that they will have enough to save. The allowance should also be given the same time every week so children can count on it. Allowances establish the relationship between hard work and money. Parents shouldn't withhold an allowance to punish a child. If the child did the work, it is his or her money.

5. Allow children to make mistakes. Children are learning something when they pay too much for a toy or buy a toy that doesn't make it though the evening. They're less likely to make the same mistake a second time.

6. Encourage children to be generous. Teach children the importance of sharing both their treasure and time. Urge children to make periodic donations to the charity of their choice. Involve them in family-oriented volunteer activities like holiday meals for the less fortunate and fun runs.

Follow these tips and you will be well on your way to raising money-savvy children. And, remember that when it comes to teaching children about money, sooner is better than later.

For help with money management or budgeting, contact CCCS. CCCS is a nonprofit, community service organization that provides confidential counseling, guidance, debt management and education programs to financially troubled consumers. CCCS of South Texas is a member of the National Foundation for Credit Counseling.

To schedule an appointment with a CCCS counselor, please call 800-333-4357 or visit their web site at http://www.cccsstx.org.