Teaching Kids About Money: Goals by Age
Watch Your Step
Lucky enough to have a precocious child? She may be years ahead in reading and math but still lack the fundamentals about money. Just because she's smart, don't assume that your child knows a thing about money.
Goals for Kids Age 11 to 13
As your child gets older (essentially middle school age), his responsibilities when it comes to money should increase. Your expectations of his money skills should also increase at this point.
Here are some things you might expect of your child at this age:
- Setting up a savings plan. As your child ages, he's better able to set goals that are more far-reaching. For example, he might want to save for a summer experience—a day at Great Adventure or Six Flags.
- Setting up a savings account. The old piggy bank may have been okay in elementary school, but once his savings grows, it's time to bank it in a commercial institution.
- Giving to charity. Even if it's only a little money, it's about time to learn about giving to worthy causes.
- Shopping wisely. Children this age may spend time at the mall on their own; they need to know about shopping for value.
Goals for Youths Age 14 to 18
By this age (essentially high school age), your child already has one foot out the door. You want her to have a firm grasp of certain money essentials because it may be only a matter of a few years—or even months—before she's away from your watchful eye.
Here are some things that should be mastered by a youth in this age group:
Financial Building Blocks
Kids are painfully ignorant about debt. According to a 1997 Consumer Reports study, 40 percent of teenagers didn't understand that banks charge interest on the loans they make. Many teens don't even realize that credit cards are a form of borrowing.
- Saving for college. College is an investment worth making—and for this age group, it's just around the corner.
- Getting a job. Nothing teaches about the value of a dollar as fast as working for it.
- Learning about investments. Your child may not yet have the bucks to buy a Treasury bill or 100 shares of Microsoft, but it's important that she understand at this age how these investments differ and what investing in general can do for her.
- Understanding what a budget is all about. Money isn't infinite (unless you've been supplying it without restriction), so she should know how to make a budget and allocate the money she has to spend among the things she needs.
- Learning about credit cards and other debt. Whether your child is ready for her own credit card is not the criterion for teaching about debt and how to handle it. It's never too early to learn the perils of having too much debt and how that can happen.
- Understanding about the different kinds of taxes. If your child already had a job, she knows that Social Security and Medicare taxes are withheld from her paycheck. When shopping in most states, she has paid sales taxes on things she has bought. And if she earns enough or has investments, she'll pay income taxes as well.
More on: Money and Kids
Excerpted from The Complete Idiot's Guide to Money-Smart Kids © 1999 by Barbara Weltman. All rights reserved including the right of reproduction in whole or in part in any form. Used by arrangement with Alpha Books, a member of Penguin Group (USA) Inc.
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