We all want our children to grow up to be economically responsible adults, but in order for them to be financially successful, you need to start them on the road to fiscal wellness today.
You first must teach your kids how to save and spend, and in order to do that, they will need to earn some dough. Provide opportunities for children to earn through designated work at home.
Once your child has earned a bit of money, open up a bank account in the child's and your name, and allow deposits and withdrawals. You should set a limit on withdrawals, but chances are that your child will impose self-limits once he or she realizes how long it takes to earn enough money to deposit. If your child doesn't fall into that category and wants to spend the cash as soon as it hits his hands, then negotiate a ``yours to do with whatever you want'' allowance provided the remainder of his earnings goes to savings.
Ask your child to create a list of his financial goals. This may simply turn out to be a list of things that he wants, but it will give perspective on the purchases and help set realistic expectations on the likelihood that the purchases will occur.
Chances are your children have seen you pay with credit cards instead of cash; look at it as a method of introducing your kids to the concept of borrowing. A good way to better help a child understand credit is by advancing a loan, complete with pay-back terms.
Involve your children in household money discussions. It may be time to plan a family vacation or could be you're looking at a major expense, such as a new roof or a car. Be truthful about what you can and cannot afford to do right now. The idea is not to scare your kids into thinking the cupboards are bare, but rather to include them in important financial family matters.
A large expense will also further cement the concept of borrowing on credit. That accountability factor is at the heart of these lessons learned. Let kids know that if you buy something on credit, you still have to pay the full price -- but it will take longer and likely cost more.
Also involve your children in the ordinary task of paying the monthly bills to support your family's lifestyle. This will deepen their appreciation for what they have and give a little more respect to the concept of fiscal restraint for things beyond your means.
Include your children in discussions when you decide against a purchase. By letting kids know you can't or won't buy everything you'd like, their eyes may be opened to the truth that money doesn't grow on trees and won't always be there ready for picking.
John P. Napolitano is the CEO of U.S. Wealth Management in Braintree. Do you have a financial issue you want him to answer? E-mail him at biznews@ledger.com or write him at ``Making Cents,'' c/o Business Department, The Patriot Ledger, 400 Crown Colony Drive, Quincy, MA 02269- 9159.
author: John P. Napolitano