Want financially smart kids? Teach by example

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#1
The Straits Times
Jan 15, 2012
Want financially smart kids? Teach by example


If you worry about whether your children will fall into the future ranks of 'haves' or 'have-nots', consider your own financial behaviour in a more imperative duality: Are you a 'doer' or a 'dreamer'?

As college tuition and student loan debt continue to soar and job growth for graduates looks sluggish in many fields, the guidance parents give their children matters more than ever, according to a new investor survey by TD Ameritrade.

Sampling more than 1,500 adults aged 22 to 81, the survey defines doers as financially responsible across the board. For starters, they have retirement accounts, follow a budget and pay off credit cards quickly. Also crucial: 74 per cent of doers reported that their parents showed them how to save and prepare for the future, compared with 64 per cent of dreamers.

'Parents have a tremendous influence on how financially responsible their children become,' says Ms Carrie Braxdale, managing director of investment services for TD Ameritrade.

The parents who are doers 'have conversations with their children about money, the importance of saving money and putting it aside', Ms Braxdale says. 'And parents actually model that good financial behaviour. They lead by example and their actions.'

The survey also showed that 83 per cent of doers have a retirement account, compared with 39 per cent of dreamers.

'That's pretty dramatic,' Ms Braxdale adds. 'You show them the value of these actions, and then lead the way.'

So doers have a way of raising children who will follow suit: Parental example overall has 'a significant influence on respondents' money-management skills as adults', the survey concludes.

It notes that children whose parents are seen as doers - who encourage their children to invest and save more - 'are more likely to become doers as adults rather than dreamers'.

When children hear positive and clear messages about money from parents, then the belief and the guidance they have is accurate as opposed to their making childlike observations where they reach mistaken conclusions, says Ms Susan Zimmerman, who operates Mindful Asset Planning with her husband.

Ms Zimmerman is a rare blend as a financial consultant because she is also a licensed marriage and family therapist, and knows the dynamics that shape a child's behaviour with money.

For parents wondering how to pass on financial wisdom, Ms Zimmerman suggests starting with the ABCs: 'A is for allowance, where a child earns a certain amount for doing a job. B is for balance, where you tell kids that you don't want to spend all of your money right away because there are things you want to save for. And C is for charity or contributions to causes the family cares about.'

The most important thing parents can do to teach their children about money is not only to lead by example, but also to share what they are doing, Ms Zimmerman says.

Her advice? Ask children where they think money comes from the next time you visit the ATM.

'Of course the kids don't get it,' she says. 'It's not an endless money machine, and that's the start of a great conversation you can have with your kids.'

That practise-what-you- preach mentality on living within your means is at the heart of Money Savvy Generation, a company that develops products to teach basic personal finance skills to school-age children.

Founder Susan Beacham practises what she preaches with her daughters, Allison, 20, and Amanda, 17.

Since she was eight, Allison has had her standard piggy bank replaced with what Ms Beacham calls a 'Money Savvy Pig' - a special bank she developed that has four slots instead of one. The slots correspond to 'save', 'spend', 'donate' and 'invest', helping children grasp the abstract nature of cash allocation in a concrete way.

Before Allison started college, she sat down with her parents and created a spending plan. 'We do this each August and she lives within her budget all year,' Ms Beacham says.

When her daughter considered moving into a student apartment, the budget played a role in getting her to reconsider.

'One of the big mistakes kids make is to move into an apartment, when it costs twice as much. She has skin in the game,' Ms Beacham adds.

Indeed, delayed gratification gets to the heart of what separates doers from dreamers.

Ms Braxdale offers: 'If there's something your child wants, that's a great opportunity to say, 'Okay, this is how much it costs, this is how you can get that money, and here's how you can reach your goals'.'

Reuters
My Value Investing Blog: http://sgmusicwhiz.blogspot.com/
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#2
actually kids "learn" from the adults around them... so... usually they grow up to be like the adults! Big Grin
1) Try NOT to LOSE money!
2) Do NOT SELL in BEAR, BUY-BUY-BUY! invest in managements/companies that does the same!
3) CASH in hand is KING in BEAR! 
4) In BULL, SELL-SELL-SELL! 
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