Values, Responsibility and the Over-Spending Bug

- Joellen Monson

An article in the Seattle Times newspaper "Look who's whipping out the credit card: high schoolers" quoted a Junior Achievement Worldwide survey which found that 20% of 18 year old high school student have their own credit card. This survey also noted that while 84% of the teens paid off their credit cards each month, only 21% of college students wipe the credit slate clean each month. The age at which young people are being targeted by advertisers has trended younger and younger in recent year and now the move toward credit spending is following suit. How do you inoculate your child against early debt, poor credit histories or even bankruptcy?

Whether it is a quarter or five dollars a week, many families have believed in giving their children an allowance. Just like the tooth fairy - inflation and peer pressure are impacting just how much money parents give to their children. So how much is the right amount at the right age? The actual amount is less important than the values you convey and the lessons you teach when giving a young person money.

Are you giving your child an allowance to pay for and reward them for chores completed around the home? What happens when their chores don't get completed? Are you giving them the money so they don't have to come and ask you for funds so often? Do they receive money because their friends do? What are your options when friends receive more money than your child?

In some families, talking about money is taboo. It simply isn't discussed. In other families the price of things determine everything from what they'll wear to who fits in to their social circle. Think about when you were growing up and examine your own attitudes and messages you received as a young person about money - ask your spouse to share what the issue of money was like in their family. Remember too, that it is one thing to talk about beliefs and feelings about money with children yet still keeping limits about the extend of information you share with them regarding what you earn or your house or car costs. This is not a discussion about status, it is a discuss about how money can be used as a tool.

Teaching children about reasonable attitudes about money from an early age are vital life skills. Letting your child know that while money can provide things for them, money will not bring them happiness and there is definitely a difference between what they Want and what they Need.

A beginning life session is letting your child know that there will always be someone who has more money than them - just as there will be people who have less money than them. What is relevant are your family beliefs and goals about money, it's usefulness and it's level of importance in your family.

Some financial experts suggest that there are two categories under which a parent can provide money to their children and four categories for children to handle those funds:

Allowance that is just given, reliably and predictably each month. This method allows the child the opportunity to manage their resources at their own discretion.

Payment for chores are available for the child to earn extra money. This lets your child learn that through additional work they may achieve their financial goals faster

These options are in addition to work that your child would do around your home as a contributing member of the family. Activities such as setting the table, feeding the pets, taking out the garbage, etc. and are decided by your family.

Then there are the ways to encourage you child to divide and use the money to it's best advantage:

Long term savings: Part of any money your child receives is put aside for the future for some more expensive item that needs multiple savings events. This teaches delayed gratification (a key tool when it comes to college, car and home buying).

Short term savings: Sometimes that weekly amount is just shy of the purchase goal of buying a less expensive item but one that still needs some time to build up enough money.

Immediate spending money. This is important for children to satisfy that instant gratification piece where they've worked hard and are able to quickly realize the benefit. (Many people live in this category and rarely experience the delayed gratification of savings.)

Charitable giving: Incorporating as an ongoing value for your child "sharing the wealth". No matter how large or small the amount, this is a wonderful way for children to learn that giving back to others is a satisfying way of getting back good feelings.

All these techniques work in tandem and will be key skills for being a responsible person in the future. Too young to start you say? Actually these are the perfect years to begin laying that groundwork for your children to handle money and look at their spending power. And if you don't do it - you better believe those banks and marketers out there aren't going to delay much longer. So inoculate your children with responsibility tools early and they'll be able to fend off the over-spending bug for a lifetime.