Even before your children can count, they know about money: it's what you give to get candy at the store. So as soon as your kids handle money, you should teach them how to do it wisely. Michael Reimann, Financial Advisor with Ameriprise Financial Services, Inc., came into our ABC 7 studio with tips for parents.
Michael Reimann's Tips:
1. Making allowances
When it comes to giving children allowances:
- Set parameters. Discuss with your children what they may use the money for and how much should be saved.
- Make allowance day a routine, like payday. Give the same amount on the same day each week.
- Consider "raises" for children who manage money well.
2. Take it to the bank
- Piggy banks are a great way to start teaching children to save money, but opening a savings account in a "real" bank introduces them to the concepts of earning interest and the power of compounding.
- As an incentive, you might want to offer to match whatever children save toward their long-term goals.
3. Shopping sense
- Television commercials and peer pressure constantly tempt children to spend money. But children need guidance when it comes to making good buying decisions. Teach children how to compare items by price and quality. When you're at the grocery store, for example, explain why you might buy a generic cereal instead of a name brand.
- Don't be afraid to let children make mistakes. If a toy breaks soon after it's purchased, or doesn't turn out to be as much fun as seen on TV, eventually children will learn to make good choices even when you're not there to give them advice.
4. Earning and handling income
- Older children (especially teenagers) may earn income from part-time jobs after school or on weekends. Particularly if this money supplements any allowance you give them, wages enable children to get a greater taste of financial independence.
- Earned income from part-time jobs might be subject to withholdings for FICA and federal and/or state income taxes. Show your children how this takes a bite out their paychecks and reduces the amount they have left over for their own use.
5. Creating a balanced budget
With greater financial independence should come greater fiscal responsibility.
To help children learn about budgeting:
- Devise a system for keeping track of what's spent
- Categorize expenses as needs (unavoidable) and wants (can be cut)
- Suggest ways to increase income and/or reduce expenses
Reimann is also hosting a free seminar.
Four Cornerstones of Your Financial Future
Date: Saturday, May 04, 2013
Time: 9:00 AM - 10:00 AM
Location: Fox & Hounds,1416 N Roselle Rd, Schaumburg, IL 60195
Presented By: Michael Reimann, Financial Advisor - Ameriprise
During this complimentary seminar, you'll learn:
- Strategies you can use that can help you feel more confident about reaching your financial goals.0
- Tips on how aligning four key concepts - cash management, protection, investing, and tax planning - can help you bring your dreams and goals more within reach.
- Ways you can identify and correct critical gaps in your current financial plan.
- To reserve a spot: call 630.762.6543, or email email@example.com or make your reservations online: www.ameripriseadvisors.com/michael.reimann/