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#1 – WHY MUST WE DISCUSS MONEY?

· Household finances should not be a taboo subject!

· Responsible personal finance is the product of positive personal behavior. Plant the seeds early and often!

· Parents go to great lengths to instill healthy habits in athletic, social, spiritual and other areas. Personal finance should also be an integral part of a child's growth and development.

· Children who experience hands-on involvement will be prepared to tackle financial issues during adulthood.

· It is easy to integrate the building blocks of financial habits if they are part of your daily activities.

· Children love to explore uncharted territory. Make financial lessons enjoyable like any new adventure.

#2 – EVERYONE NEEDS SPENDING LIMITS

· Teachable moments occur each time you are at a cash register with children.

· Even very young children can begin to understand that they can't always receive everything they desire.

· Although the word "budget" probably will not be used until your child reaches his or her teens, there are ways to establish a foundation of spending restraint that will introduce the fundamentals of budgeting.

· Emphasize the importance of dividing money into giving, saving and spending components.

#3 – BEWARE OF THE DANGERS OF DEBT

· Educate students regarding the risks of excessive and/or inappropriate debt.

· Depending upon your child's age, begin to expose him or her to the types of debt used in the household (mortgage, automobile loans, credit cards, etc.).

· Explain the appropriate way for consumers to wisely utilize debt.

· Take the opportunity to highlight the differences between needs and desires to illustrate the virtues of restraint.

· Consider providing examples of real-life lessons learned in your household.

#4 – SAVING FOR A RAINY DAY

· Help your child develop an age-appropriate savings plan for significant financial goals (e.g. a toy, bicycle or first car).

· For younger children, consider using visual aids like piggy banks or other physical containers to store money.

· Despite the popularity of online banking, it is a good idea to bring older children to a bank branch to establish a savings account so your child begins to understand the concept of banking.

· Explain that banks don't just spew money from ATM machines; show children how to make deposits and help them track their account balances.

· Consider sharing savings strategies that help the household's adults prepare for unexpected circumstances.

· This is a good time to introduce the notion of interest income.

#5 – TELL ME ABOUT TAXES

· Sales tax on purchases is arguably the most straightforward way to introduce taxes.

· If a child is saving for a purchase, show him or her that the cash outlay will be greater than the sticker price.

· Consider simulating income taxes by withholding 10% or 15% from a child's allowance.

· Expose your children to the impact of Social Security, Medicare and income taxes on a person's take-home pay!

· Help your children become informed citizens by illustrating the nexus between taxes and governmental spending.

Courtesy: www.hungerfordnichols.com 616-949-3200

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