Teaching Kids to Use, Not Fear or Crave, Money

Teenager A. J. Manker felt he needed an increase in his allowance.

Drawing on the American talent for marketing, the South Bend, Ind., teenager lit upon a creative idea. He wrote his folks an essay explaining his predicament. Costs were rising, he argued. As kids get older they need more expensive items. A.J. searched for the right words.

And he found them.

"We increased his allowance from $5 to $7.50 a week," says his mom. "It was well written."

A.J.'s family illustrates how parents and children can work together to master the nitty-gritty of financial management.

Paula and Randy Manker readily concede that resolving money issues isn't always easy.

But what's important is that they work at it continually.

"We don't want [the children] to be fearful of money," says Mrs. Manker, who along with her husband runs a multimedia company. "We also want our children to see the costs and benefits" associated with money.

"Children need to have the world of financial choices made real to them as early as possible" says Paula Hogan, a financial planner at Hogan Financial Management in Milwaukee. They need "hands-on learning experiences" at the earliest possible age.

By the time children head off to school, financial experts say, they should know the rudiments of coins and bills: putting coins together to buy, say, a 25-cent item and sub-dividing bills into $1s, $5s, $10s, and $20s.

Up to junior high, they should learn the importance of choices. Example: A.J.'s sister, Ashley, has definite tastes in clothes. So Mrs. Manker now gives her daughter a precise clothing allowance. "I tell her: 'Spend it any way you want,' but I remind her that that's the total clothing allowance."

Other lessons:

* Money is a tool to make good things happen, not to be feared or coveted.

* Conservation, such as turning off lights and recycling, both cuts the family's costs and helps the environment. Such issues lift the concept of money to a sense of sharing and making a better world.

* Responsibility counts. Look for ways to let children earn money. Ashley, for example, gets paid for doing light housework. But when she cleans a room, her mother says, "I want it to be a thorough job," just like a professional cleaning person would do.

* Be a good consumer with children. At the grocery store, compare prices. Analyze ads in magazines. Even very small children, such as Kristin Manker, not yet in school, can learn to critique TV and radio ads.

* Most important, make money a family matter, Ms. Hogan says.

And finally, don't underestimate the power and importance of an allowance. It helps kids control and understand money. - how it works; what it can and can't do.

Some parents give enough allowance to cover certain expenses, such as clothing, movies, or trips to the video arcade. So if they want those things, they have to budget.

Other parents let the allowance go to "whatever." But it's important to let the kids count their own pennies. They make the decisions; they feel the consequences.

Experts also stress that an allowance should be neither punishment nor reward. It's a paycheck, so be wary about docking it for misdeeds or boosting it for good grades.

One national survey, in "Dr. Tightwad'sMoney-Smart Kids," lists allowance levels:

Age Amount

6 - 8 $2.77

9 -11 3.72

12 -13 7.08

14 -15 8.91

16 -17 10.74

The Basics

'Son, about your stocks...'

This is about the babies of baby boomers - the offspring of the wealthiest generation in US history.

These kids have, literally, billions of dollars, and how they spend and save can affect the quality of both their young and adult lives - how they invest, how well they invest, even their job performance.

For boomer parents, the key is helping children understand money, learning to use it as a tool and not to be lured into either the love or fear of it.

Parents can take specific steps and have lots of resources to help. The process starts with preteens and their allowances, and it goes as far as open discussion with parents about their own investment successes and failures.

Resources To Help Kids Understand Money


Books for kids (Grades 1 through 8):

* The Berenstain Bears: Trouble With Money, by Stan Berenstain (Random House, 1983)

* The Purse, by Kathy Caple (Houghton Mifflin, 1986)

* Twenty-Six Letters and Ninety-nine Cents, by Tana Hoban (Greenwillow Books, 1987)

* Sheep in a Shop, by Nancy Shaw (Houghton Mifflin, 1991)

* Let's Learn About Money, Bank Street College of Education Media Group (Barron, 1986)

* Money, Money, Money, by Nancy W. Parker (HarperCollins, 1995)

* Making Cents: Every Kid's Guide to Money, by Elizabeth Wilkinson (Little, Brown, 1989)

* Budgeting Know-How, by J. Long (Cambridge Books, 1988)

* Straight Talk About Money, by Marion B Rendon and Rachel Kranz (Facts on File, 1992)

* Smart Spending: A Young Consumer's Guide, by Lois Schmitt (Scribners, 1989)

For Parents:

* Dr. Tightwad's Money-Smart Kids, by Janet Bodnar (Kiplinger/Times Business, 1997)

* Making the Most of Your Money, by Jane Bryant Quinn (Simon & Schuster, 1997).


* www.plan.ml.com/family

Some thoughts on the benefits of saving, aimed at kids, parents, and teachers. Plus activity sheets (create a budget, investigate investing) and an inflation calculator.

* www.kiplinger.com/drt

Kiplinger's senior editor, Janet Bodnar, gives some basic wisdom and answers parents' questions about how to teach kids the value, and the values, of money.

* www.nbc.com/atthemax/money

Especially for teens. Contains a "reality check" survey that shows how much income you'll need to pay for the adult lifestyle you want. Also contains a "personal money" survey - testing knowledge about finance - and a "should you buy it?" test about spending.

* www.cashuniversity.com

Ideas for kids and parents on how to teach kids the values of earning and saving money. Includes charts, savings plans, and even a degree that your kids can receive once they reach their first savings goals.


A story on page B6, April 27, incorrectly identified one source. Her name is Vincenzina Santoro, economic adviser to the Portuguese Trade Commission in New York. Another name should have been Paolo Pesenti.

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