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Going from Piggy to Plastic: Tips for Raising Money-Smart Pre-teens

Children grow up quickly ? and the transition from piggy banks to credit cards seems to happen just as fast.

So how can you help your kids become money-smart before it?s too late?

Here are three tips to help you get started:

1. CREATE TEACHING MOMENTS
Children notice when you use credit or debit cards to pay for purchases, or when you get money from an ATM. Use these transactions as opportunities to explain how paying with and using plastic works. You'll help your children begin to understand banking basics.

2. CONSIDER AN ALLOWANCE
Children who spend and manage their own money are more likely to appreciate its value. However, before receiving an allowance, kids should understand money denominations, and show an interest in spending.

One option might be to give $1 for every year of your child's age. Another option would be to choose an appropriate amount based on your child's age, spending habits, and your budget. Parents shouldn't feel compelled to pay allowances, but it's wise to give children opportunities to manage money on a regular basis.

3. MAKE SAVING A HABIT
Encourage your child to save at least 10 percent of his or her income, whether the money comes from mowing lawns or a weekly allowance. Learning to save will pay off when they become adults.

Children like to know their money is growing. Consider matching the amount they save in a bank account. Setting goals can also encourage children to save. Raising money-smart kids can be fun and enlightening for you both. Starting now will help children develop strong money management skills later in life.

For more information about teaching children how to manage money, visit usaa.com and enter the search term "First Start."

Stephen Power is a salaried CERTIFIED FINANCIAL PLANNERTM practitioner with USAA Financial Planning Services, one of the USAA family of companies. Power also served three years on active duty as a journalist and broadcaster in the U.S. Army.

Consider the investment objectives, risks, charges and expenses of the USAA mutual funds carefully before investing. For a prospectus containing this and other information about the funds call USAA Investment Management Company at 1-800-531-8181. Read it carefully before investing.

Nondeposit investment products are not insured by the FDIC, are not deposits or other obligations of, or guaranteed by USAA Federal Savings Bank or USAA Savings Bank, are subject to investment risks and may lose value.

USAA Financial Planning ServicesSM refers to financial planning services  and financial advice provided by USAA Financial Planning Services Insurance Agency, Inc. (known as USAA Financial Insurance Agency in California), a  registered investment adviser and insurance agency, and its wholly owned  subsidiary.

Systematic investment plans do not  assure a profit or protect against loss in declining markets. USAA means United Services Automobile Association and its affiliates. Investment products and services provided by USAA Investment Management Company, a registered broker dealer. Banking products provided by USAA Federal Savings Bank, an equal housing lender, FDIC-insured.

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