Creating Fiscally Savvy Kids

You can never be too young to start learning about money. How young? Well, that question is debatable. But financial experts across the country agree that it is more imperative than ever before for children to learn fiscal responsibility to survive in our consumer-driven society.

Washington-D.C.-based Jump$tart Coalition for Personal Financial Literacy ( reports that "the average student who graduates from high school lacks basic skills in the management of personal financial affairs. Many are unable to balance a checkbook and most simply have no insight into the basic survival principles involved with earning, spending, saving and investing."

Starting Point

"Sound money management practices start with parents and start at birth with investments," says Cuttie W. Bacon III, Ph.D., author of How To Teach Kids To Be Millionaires (Dr. Knose Publications, 2000), professional speaker and director of a Chicago charter school.

As a parent, Bacon says the best thing you can do for your children, "besides love and nurture them," is to invest in their future. Aside from putting money into an individual retirement account or other investment vehicle, Bacon says investing in your children's future includes teaching them to earn, spend, live beneath their means, and to invest.

Show By Example

"Any parent, regardless of income, can have consistent money-saving practices that will prove to be rewarding. For example, by reducing the amount of junk food consumed or reducing entertainment or clothing expenses, parents can save $1 to $2 a day which can be put into a checking account each month end before opening a mutual fund," Bacon explains. "It's amazing how minor lifestyle changes can produce large savings."

Bacon maintains that as parents, you must remember not to preach to your children but demonstrate good financial sense. "The financial education starts as soon as a child asks for money, by age 2 or 3 because this is when children copy everything they see their parents do. So if they can observe good spending, saving, and investing habits, they will follow suit. A part of this education is to ensure that children learn that money is exchanged for goods and services."

Teaching children how to spend money is an important step toward building a bright financial future, according to Bacon. "Saving money is important but establishing those thought processes that enable children to learn how to spend money is equally important." For example, Bacon says, as parents, you can educate your youngsters about the dangers associated with eating candy and snacks:

      Candy destroys teeth.

    • For many kids, candy elevates their level of hyperactivity.

    • There are no returns on this investment (candy).

    • Candy often ruins children's appetite for healthy foods.

Bacon says that you can then teach your children that instead of the candy, they can place 50% of the money in a piggy bank to be invested at the end of the month and perhaps spend the remainder on a budgeted (much-wanted) item.

Teaching your children to be resourceful, independent, and unique is yet another component of a successful financial future. Bacon says these tools will empower your children to avoid commercialism's clutches. (Wearing only brand name clothing and buying the so-called "in" products seen in the media.)

Allowance Debate

Bacon says, "Nowhere in life do you get money for doing nothing so parents need to be consistent throughout life and show their children how they have to work for money and how money is related to everything in their household: gifts, energy, food, furniture, et cetera."

The pervasive thought among many new-century financial experts is that instead of an allowance, parents should exchange money with their children for a good or service. "Parents have to be in charge of the household, not children. There is a school of thought that attaching an allowance to chores doesn't work," Bacon said, "but it does because good parenting means being tough and setting limits."

Michael Stahl, author of Early To Rise (Silver Lake Publishing, 2000), agrees. "Parents have to strongly encourage children to save and invest. Establishing a basic allowance and budgeting system is most important," says the Kansas teen-ager. "Just giving kids money is not enough. Parents need to tie that allowance to actual money practices and that can translate into assigning kids certain household jobs like picking up areas in the house other than the child's room. Stahl says the chores should be age-appropriate and include doing something for the family as opposed to just picking up after themselves.

Additional Money Management Tips

Part of a well-rounded financial education includes involving children in every aspect of your household's finances, including learning about household expenses and payments to learning about investment accounts established by you for your children.

"I started learning about how money really works in the fourth grade, but parents can start working with their children a lot younger," Stahl recalls. "I received a gift of money and my parents told me I had to do something with it. I put the money into Atari stock because I liked Atari video games. It (stock) did pretty well. My parents had set up a custodial account for me and helped me follow its performance."

Stahl says encouraging your children to pick their own companies in which to invest and teaching them how to analyze companies are invaluable tools.

Allowing Outside Financial Help

Working long hours each day, carpooling your children to extracurricular activities, and keeping up with household chores are time-consuming and do not always allow time for anything else, much less teaching financial strategies. But alas, there are many organizations available to aid you and America's educators. More importantly, these institutions are designed to help children help themselves.

The Council on Economic Education ( in Maryland is one such organization. Its economic programs reached more than 118,000 students in kindergarten through 12th grade during the 1999-2000 school year. Mary Ann Hewitt, director of education programming for the Council on Economic Education says that if children are taught sound economic skills, they will learn to make sound economic decisions.

"The skills we teach allow students to be confident, responsible consumers, citizens, and voters. We arm students with the information to make informed decisions," Hewitt says. "For example, students learn about 'important documents.' What paperwork is vital in this society? Many children do not know which information they should obtain and keep and which paperwork they should throw away. This is important information, particularly long before a student finishes high school and leaves for college."

Hewitt asks, "What if your child is in a car accident? Does he or she know to have registration information available, to have detailed insurance information -- including agent's name and address -- handy and what information should be retrieved from the other accident parties?" "Every student should know this and yet many do not," Hewitt contends.

Another organization that is very instrumental in preparing students for life's sometimes-harsh economic realities is Field Trip Factory ( This Chicago-based company provides totally free field trips and information materials to all organized children's groups such as schools, scout troops, camps, etc.

Field Trip Factory founder, Susan Singer, says money management is one component of its company's multiple field programs. "Last year we started working with ABN AMBRO's LaSalle Bank which has more than 100 branches in Illinois. We come in and train their people on how to work with the children and prepare information for the banking field trips," Singer says.

She says everyone benefits because not only do the students learn about all aspects of banking but also the bank enjoys the opportunity to give back to the community and work hands on with potential customers and/or employees.

"The teachers and kids are so excited. Last year, 9,000 to 10,000 children participated in the banking field trip. For the banking field trip, like the other industry field trips we offer, we provide worksheets and the banks provide various information that students can take home and share with their parents," Singer explains.

The banking field trip teaches financial concepts commensurate with the age of the children. For example, Singer says that kindergartners learn about money. "What is money? They get to touch it and learn about how it is used. They also learn about other types of exchange systems such as bartering, used long ago," Singer says. By eighth grade, she says, students in the banking field trip learn about interest, calculating interest, and about accruing certain amounts of dollars.

"In a nutshell, our goal is to prepare these children for the future," Says Singer. "We are introducing children to jobs as well as learning. Most important, we are impacting what parents teach their children."

Online Resources:, investment guide for teens and their parents


The Princeton Review, provides college financing information including loans


Cash University, teaches children and parents money management


Association for Special Kids, financial planning for parents with disabled children


The Money Tracker, financial calculator