Money Matters – National Family Week: Our Kids Need To Know About Money
BOSTON (CBS) – What a day to be out! This is the busiest shopping day of the year and I for one am staying far away from the malls. Far, far away! But even without me, millions of dollars will trade hands today.
Today is referred to as Black Friday. A good day will keep the retailers in the black.
But I digress, so you are out shopping and you may have the kids with you in the car. As harried as you are right now why not give the kids a money lesson. If you get them alone in the car and you can get them to turn off the music or games you have a captive audience.
Kids need to understand money and how we as adults get it into our hands. Tell a small child that you have no money to buy something, and she will tell you to charge it. Kids also think that money comes from the ATM. Most kids have never been inside a bank, just the drive through or the ATM machine. And worse they think ATM stands for Always Taking Money.
They need to understand the concept of working for money, getting paid for that work, and depositing a paycheck into the bank for safekeeping. This gives us the privilege of going to the ATM to make withdrawals of our money so that we are able to purchase goods and services. Most 6-year-olds are able to grasp this concept.
A harder concept is charge cards and how they work. These are just short-term loans that we get when we use our credit card. If we pay if off each month, no interest is charged. The card is our form of identification to show the merchant that the credit card company has money set aside that we can borrow to make our purchases.
Teaching kids about delaying gratification is also important. We’ve all witnessed a kid throwing a tantrum in a store and then getting what he wanted. For starters, have the kid begin to save for something he wants like a video game, a CD, or a scooter. Make it attainable in a couple of weeks; any longer than that and you’ll lose ‘em.
Now, if you want to take this one step further, offer to make the child a loan to help purchase it. Charge interest because that is the cost of borrowing. The child can pay you back a certain amount each week when he or she receives their allowance. Visit BankRate.com and use their calculator to figure out the loan payments.
Take whatever opportunities come up to make your kids money smart.