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Many parents have trouble dealing with the question of when to start introducing their children to the
realities of money and credit management. Quite simply, the age old standby of an allowance provides a
simple reference for how income and spending operates. Some parents choose to provide a static
income as a sort of stipend – an amount that is given each week regardless of actual work done around
the house. Other parents, however, encourage their children to put in extra effort by putting in
“bonuses” in the allowance for out of the ordinary chores being performed such as cleaning out an attic
or helping a cousin move.
In either case, if an allowance is provided it should be seen as the beginning, not the entirety, of a
child’s education. Beyond that, parents should take the time to answer their child’s questions about
money, such as explaining why you can’t always just write a check if you don’t have money in the
wallet. While many exact details of your budget may be too personal to share, it may not be a bad idea
to give general answers about why you can’t see a movie every night and still have money to pay for
the lights.
Additionally, the internet provides a great many resources aimed at introducing kids to the somewhat
adult topic of money management. In the last several years, a number of Web sites have sprung up
devoted to helping kids of all ages learn about money and investing. Here's a sampling of some of
the better ones:
For Children Six to Nine
www.fleetkids.com, sponsored by the Fleet Bank, has great games -- like "Buy lo, Sell hi" and "Chunka
Change" -- that teach kids about spending and saving. Kids can compete for prizes such as computers
and backpacks for their schools.
For Children 10 to 13
www.strongkids.com teaches about investing, earning and saving money. It also explains IRAs, trust
funds, and savings accounts for kids under the Uniform Gift to Minors Account. Children can use
the "ladder" to chart their savings goals and the "tape measure" to learn about compound interest, and take
the "hard hat quiz" to get the basics of mutual funds. The site also has a thorough glossary of financial
terms.
www.zillions.org is the successor to Zillions, once the premiere financial education magazine for children.
The magazine, published by Consumer's Union, has folded, but a Web site is under construction
and scheduled to be fully operational in September. You can visit an early version of the site and enjoy its
new features -- such as a baby-sitting comic strip and a product review of toys -- and write in your
comments for what more you'd like to see.
www.savvystudent.com gives lessons in saving and spending money for entertainment, food, travel
and clothes. Kids can subscribe to a free monthly E-newsletter and use the "Dear Savvy Student"
center to submit financial questions online.
For 14 to 18 Year Olds
www.steinroe.com is sponsored by the investment company of SteinRoe and Farnham in Chicago, which
also has a mutual fund designed especially for kids. The Stein Roe Young Investor Fund invests in
companies that kids tend to know: Apple, Cisco, General Electric, Microsoft and others. It carries
Morningstar's highest performance rating of five stars and returned an annual average of 29.9 percent
for the five years through 1999. You need a $100 minimum to start and at least $50 a month after that.
www.youngbiz.com is a site that also tracks the performance of stocks that teens are familiar with and
has articles about student investors and student-run businesses as well as career planning advice.
www.ssa.gov/kids/faq.html is one of many good sites presented by U.S. Government agencies. This
one tells you just about all you would want to know about the Social Security System.
www.kidsmoney.org is replete with articles on how parents can teach their kids about money and also a
section where parents vote on the most important principles about money to impress upon children.
There are also many suggestions for ways kids can make money such as taking pictures at parties,
typing papers and raking leaves.
www.kiplinger.com/managing/kids is a site that helps parents determine ways of financing everything
from summer camp to college, and more. It offers advice about setting up a checking account for your
child and information on how the IRS assesses chore money. (Any income your child earns over $4,300
will face federal taxes at the 15 percent level.) There is a "piggy bank calendar" that helps kids plan
their savings to pay for camp, clothes and even college.
(links taken from DowJones Marketwatch – www.marketwatch.com)
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