Developing Good Financial Habits for Your Family

Show Me The Money (Then Show Me How to Use It)

By Lydia Rueger

They're going to find out sooner or later, so they might as well learn it from you instead of on the street…

Things cost money. And money has to be earned. Enough said? Well, not really. But the good news is, they’ll probably listen: According to a poll by Northwestern Mutual Foundation’s www.themint.org, seven out of ten teens say parents influence the way they save and spend money more than celebrities, TV shows, teachers and friends. Dr. Vaneesha Boney, assistant professor of finance at Daniels College of Business at the University of Denver, finds that when discussing career and financial aspirations with her students, they frequently cite one or both parents as their main motivation and source of guidance.

The bad news? Financial worries are the leading cause of chronic stress in America, according to a study by the American Psychological Association. What’s more, one of the fastest ways people develop unmanageable debt is from credit cards accumulated while they were young, according to Cheryl Swanson, financial consultant for AXA Advisors in Denver. In a culture where kids are bombarded with stuff to buy, as well as the technology to buy it easily, helping them develop good financial habits now will allow them to grow into responsible individuals in all areas of life.

Start Young

Once children have learned the value of coins and paper money—around kindergarten or 1st grade—starting an allowance is a great way to begin teaching them about finances. Richard Martinez, president and CEO of Young Americans Center for Financial Education in Denver, says that the “sweet spot” for teaching kids is between the ages of 5-14, when they are most eager to learn and develop money habits. (For more on allowance management, see the sidebar, right).