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Money Concepts to Convey to Your Child

Watch Your Step

Financial words can be very confusing because one word can have two or more very different meanings. For example, kids are always talking about bonding with each other—they probably don't have the vaguest idea that “bond” also refers to a debt instrument. And an “instrument” isn't only something you play to make music; it's also a financial obligation that makes money. Don't assume that your child understands the money-meaning of a word.

Setting an Example

Children are smarter than you think. It won't take your teenager long to know you're in financial trouble if the bill collectors are calling every day and you've instructed him to say you're not in.

Setting a good example isn't dependent on how much money you earn or how much you have in the bank: It's about instilling the values and attitudes you hold about money. You could be living on a tight budget and might show your child a thing or two about responsibility.

Talk Isn't Cheap

When I was in elementary school, I used to ride my bike to the candy store down the block to get my father a copy of the World Telegram Sun, an afternoon newspaper that had the closing stock market prices. (The New York Stock Exchange closed at 3:30 in the afternoon until 1974, when the closing bell was changed to 4 P.M.). When he'd come home from work, we'd sit down to dinner as a family. Between courses, my father would thumb through the paper and casually tell my mother as she was serving dinner various stock prices, noting what was up and what was down for the day. The alphabet soup of ITT, RCA, and IBM didn't mean a lot to me at the time, but looking back, I confess that I did learn a lot about investing just by sitting at the dinner table. My dad was no tycoon, but his talk about the market helped me learn the terminology—stocks, bonds, splits, dividends, and more—just by being there.

Today, it's no longer the norm that families sit down to dinner together each night. Hectic schedules lead many families to eat on the run, one by one. Children lose out on the opportunity to pick up valuable information in an offhanded way. Still, there are many opportunities for talk:

  • Family meals. With a little extra effort, the family may be able to dine together on some nights during the week. There's always the opportunity for a weekend meal together, too, even if it's Sunday brunch.
  • In the car. Suburban moms and dads say they're always in the car—I used to think I spent more time carpooling each day than sleeping. This may sound like a negative thing, but you certainly can turn it into a positive. Usually your kids are in the back seats, so they're captive audiences for conversation. Even when kids get older and are driving on their own, parents still spend a good deal of time in a car with their children, driving to doctors appointments, soccer games, and school events. There's plenty of time for talk.
  • Leisure activities. Parents often socialize with their children through sports or other leisure activities. A round of miniature golf or an afternoon of fishing can provide opportunities for conversation.

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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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