Helping youngsters make some sense out of saving cents

Our 14-year-old son once spent an entire afternoon telephoning area banks to check on interest rates, then shifted his hefty savings account into a higher-yield money market fund. Another of our children spends her allowance the minute she receives it. As every parent knows, no two youngsters will develop the same spending patterns, despite being exposed to the same philosophy. In addition, between TV advertisements and peer pressure, today's child is bombarded with messages to ``Buy, buy!'' Saving, planning ahead, and even saying ``no'' are principles many youngsters find difficult to understand.

Parents want children to respect the saving ethic and to learn to manage money prudently. Should we wait until Junior reaches adolescence before discussing the finer points of spending and saving? Or can groundwork be laid early, even in the preschool years?

The sooner children learn about money, the better. And although preschoolers cannot grasp the whole idea, they can be exposed to certain attitudes that will affect later spending behavior. For example, a three-year-old is not capable of thinking far down the road or saving for some future event -- he lives in the present moment most of the time. But he can begin to develop self-control if his parents explain that he cannot buy everything he wants and that choices have to be made.

Not too long ago I was working on this premise with my preschooler at the supermarket candy counter. I told her she could spend a quarter and she soon discovered that a quarter would not purchase a coloring book or a doll. Now she was hard at work, considering her choices from every angle. ``Can I have this big candy bar?'' she asked.

``That one is 50 cents,'' I told her. ``You have 25.''

``Well, can I buy these raisins?''

``You can buy two boxes of raisins for a quarter.''

``H'm . . . two . . .'' She fidgeted, torn between alternatives: the immediate treat of raisins or waiting until a future day when she would have more money and could buy the candy bar. In reality, my daughter was gaining far more than a treat. She was faced with curbing her desire for instant gratification and considering choices before making her decision. Both concepts were absolutely necessary if she would eventually handle her own money in a responsible way.

Parents who discuss budget limitations with their preschoolers, who offer choices and refuse to be swayed by pleas, lay a strong foundation for self-control in future money management. And while there is nothing wrong with an occasional impulse treat, it should be the parent's decision, not the child's.

Once a youngster has reached school age and has the ability to plan, he can be introduced to the idea of an allowance and how to handle it. But parents should be clear in their own minds about how the money will be used. Is it strictly for fun -- to buy whatever Mr. Six-Year-Old wants? Is part of it to be spent on school supplies or gifts?

Parents may want to start with a minimum amount, then increase the sum -- and the responsibility -- as the child gets older. This can be done by giving a youngster three envelopes marked ``Save,'' ``Spend,'' and ``Share,'' discussing what amount might be placed in each -- and then getting out of the way. If Mr. Third-Grader spends every dime on candy -- and has nothing in his ``Share'' envelope with which to buy Daddy's birthday gift -- Mom should not bail him out. If he decides to buy a poorly made, overpriced toy, the choice should be his. Learning to plan and buy wisely involves many mistakes along the way, and a child who must face those mistakes will also learn from them.

It's also advisable that children not be paid for doing routine chores around the house, and an allowance should never be withdrawn as a punishment. In the ideal family, everyone shares both the work and the wealth, and this principle should not be based on merit or behavior. Withholding money as a punishment also encourages children to place a high value on it and to become more materialistic than they otherwise might be.

Rather than a list of ``dos'' and ``don'ts,'' teaching a child to handle money involves early attitude formation and the willingness to let Junior accept both the responsibility and the result. It takes a long time, but with parental patience and tolerance, children can eventually become prudent money managers.

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