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Economy Project: Kids And Money

By Sam Baker, KERA Morning Edition Host

Dallas, TX –

April is Financial Literacy Month. Efforts are underway to teach or remind us about the proper ways to handle money. That's usually directed at adults. But in a series of webinars this month, Todd Mark of Consumer Credit Counseling Services will also include one for children called "Lil' Kids and Money." He explained why to 90.1's Sam Baker in this KERA Economy segment.

Todd Mark: There's such a capacity for kids to understand, early on, the value of a dollar. The idea that you don't have instant gratification, that you get what you want, but you have to work and sometimes save for the things that you want. Those represent goals.

Sam Baker: How early do you start with that?

Todd: The moment that they're able to walk around, they can go and do WalMart or Target or Toys-R-Us...

Sam: Daddy, I want.

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Todd: And they say "Daddy, I want", that is the moment you start talking about you can have it now or you save up and have it later. It's never to early to start providing an allowance, and I'd say three years old is a good age because, depending on pre-school, they've got counting down. That's a good time when they can start counting their pennies, nickels and dimes up to a hundred and they realize this is a dollar.

Sam: What is an appropriate amount to give a child for an allowance?

Todd: I'd say figure out what's appropriate for your family. Don't put of your needs at stake for a lesson like this, because you can teach your kids in other ways the value of a dollar. And it's not just an allowance, but you should also give them the opportunity to earn through chores so they can build up money. And the big mistake I see parents do, Sam, is they say "Save, save, save and will put this away and it'll be good for you somewhere down the line." You're not teaching them the value of a dollar unless they have that cash in their hand and they use it.

Sam: Because it has to occur to kid, "I keep saving, but I get nothing out of it. I get plenty of money, but I never get to enjoy it.

Todd: You're not positively reinforcing the lesson we're trying to teach, so to learn the value of a dollar and how to be a savvy consumer you have to actually have them spending. Now anybody that has a kindergartener or above, you know they are full out consumers, and from commercial programming they see on TV, they know more about what's in the store than we as adults do. They're exposed to so much, they need to be exposed to the basics of what do you really want. For example, my six year old, we try to aim for two dollars a week and he'll know that to get, say, a Bakugan action figure roller - these little balls that pop up - normally six bucks. So he would know he's gotta save for three weeks and he can get a new Bakugan figure. Of course, if he does some extra chores, he may be able to earn another dollar during the week, and if he does that for two weeks in a row, well then he can do it in two weeks rather than three weeks. You teach them that they've got to work and that they've got to earn and they've got to save, and explain that if this is your goal, this is your priority, you can have it in time.

Now it's not just to understand the value of a dollar, but really to teach them how to be a savvy consumer and how to price shop, to comparison shop. Now my daughter, Katie, she's ten, and she goes through the fliers every Sunday morning and pull them out of paper and say "Oh look, this is on sale! This is something we've been thinking about."

Sam: So there are ways kids can learn using the same methods that adults use that they really can understand and buy into.

Todd: Who would know that my ten year old would become a coupon fiend? If it's one of her favorite restaurants to eat, she says look what came in the mail. It was a coupon. Maybe that's the reason the next time we go isn't costing us as much money. She's thinking like that.

Sam: Do you find, in the course of these classes, parents becoming better money managers than they had been?

Todd: This opens up the dialog between the parents and kids. Remember that our young kids are going online and they're shopping. So, when my daughter got a $25 iTunes gift card for the holidays and she's going online and shopping, eventually it runs out and she says "Can I use the credit card" that's linked to our iTunes account, we explain the whole process of "Let's track exactly what you're going to spend and you'll see the bill at the end of the month, and whether you're going to be paying toward that or whether that'll be part of the family budget for entertainment." It's incredibly valuable.

Todd Mark is Vice-President of Consumer Education for Consumer Credit Counseling Services of Dallas.

For the schedule of Todd Mark's webinars: