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 MOMENTSChildren 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 ALLOWANCEChildren 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 HABITEncourage 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.

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