CONSUMER FOCUS: Education
Kids make 'cents' of money matters
Local financial experts offer advice on banks and budgeting
As your toddler watches dollars spew magically from an ATM, you might well wonder what lessons he’s absorbing.
What and how soon do kids need know about money? Is too much too soon a bad thing?
One thing’s certain. You’re not going to get any “right” answers to those loaded questions from the so-called experts.
From Oprah to financial guru Suze Orman, everyone has strong opinions these days about whether kids need an allowance, a credit card or bank accounts, or if they should get lectures about the family budget.
What it really boils down to is your own values about money. To that end, MoneySmart asked a cross section of real people who are parents — and who work with or teach about money — what they think.
Jim Wilson, board treasurer, OPCS Federal Credit Union: For five years, Wilson has tended a successful banking program in Orchard Park’s elementary schools in which specially trained fourth and fifth-grader tellers manage interest-bearing school bank accounts for their classmates.
The confidential, numbered accounts can be reviewed online at any time by the account-holders and their parents.
“We want students to be involved and get in the habit of saving and checking their accounts and watching their money,” Wilson said.
The program will be expanded to East Aurora next fall.
Wilson believes it is important for children to have a bank account before they go away to college, so that they can gain experience balancing and managing funds of their own.
The credit union also offers a finance class for high school students that covers a variety of practical money topics like how to apply for a loan, the ins and outs of checking accounts, and how to select a credit card — or not. To find out when that class is offered, students or their parents should call the credit union at 662-1311.
Arthur A. Glick, senior vice president/financial consultant for RBC Wealth Management in Amherst and father of two girls, ages 12 and 14: His children have had access to pocket money since they were 10, and some of that includes grandparent gifts. They don’t receive an allowance.
Glick’s 14-year-old baby-sits for money; the 12-year-old is too busy with gymnastics at the moment to earn outside money. The girls’ savings account is held in the Bank of Dad. Their bank record is a notebook kept atop Glick’s dresser. All deposits and withdrawals must be signed by Dad and the depositor. They are learning to manage money by buying small items like CDs and small electronics.
Until they get a job or go to college, it is Glick’s feeling that his children do not need to open a formal bank account. As for credit cards: “Forget about it,” he says. “They are tools for trouble. When they go to college, I suppose I’ll give them one of those prepaid debit cards. Those are not a bad way to go with kids.”
As the economy has tanked in recent months and the news stories are focusing on how much people are hurting financially, Glick says he finds himself making his children more aware of what things cost.
Scott R. Dixon, director of Academy of Finance, Lancaster High School, father of triplets, age 8: All of Dixon’s daughters receive an allowance tied to chores, which will change as they reach middle school. At that point Dixon will insist that they begin using allowance for some clothing and entertainment expenses, so that they can make some “mistakes” and learn from them. He does not believe in rewarding children with money for good behavior or grades.
A school teacher, Dixon teaches in a highly regarded three-year national curriculum used at Lancaster High School and several other area high schools known as the Academy of Finance. It teaches kids to handle real-life money situations they are likely to encounter as they reach high school and college.
At the moment, Dixon is teaching a class of juniors about establishing a savings account and setting specific monetary goals — like saving for the prom or college or Spring Break. They choose their own dollar goals and set the pace of saving at the beginning of the academic year. Then they must submit weekly receipts from the school bank or an outside bank to Dixon showing their progress toward the goals.
“Some of it is just getting them to do it,” Dixon said.
In a separate project on budgeting, students pick slips of paper from a hat that have specific occupations listed on them. Then they must then develop a six-month balanced budget of fixed expenses — including savings, a mortgage or rent, utilities, insurance, etc. — tied to that specific job. They have to plan for unexpected events, too, like increases in gasoline prices.
Dixon firmly believes kids need the opportunity to practice handling their finances before they go off to college. “I call it the shock of poverty,” Dixon said. “They’re going to feel poor.” And that, he said, is going to make the pitch to sign up for a free i-pod if the sign up for a credit card all the more seductive if they go away to college with no financial experience.
Log into MyBuffalo to post a comment
MyBuffalo is the new social network from Buffalo.com. Your MyBuffalo account lets you comment on and rate stories at buffalonews.com. You can also head over to mybuffalo.com to share your blog posts, stories, photos, and videos with the community. Join now or learn more.
Reader comments