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New York Life: Teaching Money Smarts To Your Kids

10.17.2013

New York Life has teamed up with WOW and graciously offered us our very own WOW Financial Advisor! Be on the lookout for smart tips and advice from our friends at New York Life...

What’s the best way to teach money smarts to your kids? The real world.

It’s up to you to teach your kids how to manage money. Don’t think of it as a lecture, but a field trip using your daily errands as examples.

Daily life can be your classroom when you are teaching your children about money. No matter how old they are, kids can benefit from better understanding how money and budgets work. And in today’s savings-conscious economy, these lessons are more important than ever.

The easiest way to get started is by discussing the spending process with your kids as you do your day-to-day errands, such as filling up the car with gas or dropping clothes off at the dry cleaners.

Let’s start with a trip to the gas station. With the high price of gas, this is the perfect opportunity to talk to your kids about how you might save a few dollars. For example, use self service rather than full or show them how to find a service station with slightly cheaper gas, showing them where the prices are posted. Those pennies add up.. Some gas stations charge less if you pay with cash rather than with a credit card. Discuss with your children why it costs a business more when customers use credit cards.

A related topic to discuss with your older children is who in the family is responsible for paying for gas. Have your teens figure out how many trips a week they’ll take, where they’ll go and how much gas they’ll need. If you ask them to run an errand or drop off the younger siblings somewhere, let them know that you’ll pay the cost of that trip. Also, decide on an amount of gas that you are willing to pay for each week, such as a half tank or perhaps a fill-up. Then set the rule that they must pay for any additional gas they’ll need. Help them set up “gas saving” strategies. They could carpool with their friends and rotate whose car they’ll use. Or, if your child is the only one with access to a car, it’s perfectly fair for them to ask their friends to chip in and split the fuel costs.

As for the dry cleaner, figure out how much your time is worth if you laundered and pressed the shirts yourself versus taking them to the dry cleaner. Depending on the number of shirts and the amount of time needed to clean and press them, spending $4 per shirt at the dry cleaner might win out. However, there will be occasions where you have no choice but to use the cleaners for certain fabrics. Explain this to your children as the reason you’re spending the extra money. The same might be true for things like a shoeshine, a manicure, or a haircut.

However, sometimes it’s OK to spend a little extra money if it’s for something that’s high quality or something you deeply believe in, such as buying American-made products or products from a particular company because you or a relative work there. Whatever the reasons, if it strongly influences your buying decisions over all other considerations, you may want to explain your position to your children.

Whatever your buying values are, share these consumer lessons with your children so they become fiscally fit.

 By Jane S. Conti, Vice President; New York Life Insurance
    nylifelogo   newyorklife

This material is being provided for informational purposes only. Neither New York Life nor its agents provide legal, tax or accounting advice. Please contact your own advisors for legal, tax and accounting advice.

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