BOSTON (CBS) – Dealing with the Terrible Twos is a piece of cake compared to dealing with your college freshman telling you she has maxed out on her credit card or your son asking you to co-sign a loan for a motorcycle.

[Audio|titles=Kids And Money|artists=Dee Lee]

Being a parent is a tough job! No instruction manual came with that baby. When my kids were growing up, I always seemed to be the “bad” parent. Everyone else’s mother gave them all of things they ever wanted or asked for. And I was always saying “no”.

Start the money conversations when they are young. Many kindergartners are exposed to the magic of credit. Many school lunch programs have debit cards. Kids are exposed to these cards that make good things happen. They see you hand the clerk a credit card and you walk out of the store with the new toy, a DVD, groceries.

Give your kids an allowance and do not tie it to chores. As part of a family, they should be expected to help with dinner, the yard work, the laundry etc. If they want to earn more than the allowance pay them to wash the car.

Give them some guidance here with their allowance. Does this include their lunch money, money for church on Sunday? As the child becomes older, they should be expected to learn to budget their allowance. Formalize it by writing it all down and take this opportunity to explain percentages. 10% for church, 15% for savings, etc.

This is their money. When they spend it, they should not be thinking of it as your money but theirs. If they think of it as your money, they may believe there is a never-ending supply.

Let them make mistakes with their money when they are 10. Those lessons will serve them well when they are 30.

Whenever you have the opportunity, sneak in a money conversation. We give our kids the sex, drugs and alcohol lectures but often forget the money conversations. They should understand the credit card basics long before they start middle school.

It goes like this: When you use your credit card to buy something you are borrowing from the credit card company and you pay interest on that loan. To avoid the interest payment you pay off all of your charges each month. And to get the money to pay off the charges you go to work and get paid for what you do. Keep it simple.

There are calculators online at that can help you figure out how much interest you will pay if you only pay the minimum on a credit card.

One more thing:

Talk to your kids about money and include:

Allowances                             Checking accounts

Budgeting                               College costs

Credit cards                            Grad school

Debit cards                              School Loans



Leave a Reply

Please log in using one of these methods to post your comment:

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s