Ah, children. We know you’re trying your best not to mess yours up, but teaching kids about money is hard. If it wasn’t, this credit card would not even exist. So what do you do?

Kiplinger’s has put together a list of 6 back-to-school money lessons for every stage of your child’s development. Does it work? Well, my parents did this stuff with me and I don’t live under a bridge or anything, so it certainly can’t hurt.

Remember: teaching your kids about how the financial world works is more valuable to them than just giving them money. They’ll thank you when they’re 25 and don’t have credit card debt!

Kiplinger’s Back-To-School Money Lessons:

• Ages 3-5: Big-Picture Years. Keep things simple and don’t expect too much. Encourage kids to put coins in a vending machine or pay the ice-cream man. They can play with fun savings banks, learn the difference between pennies, nickels and dimes, or collect state quarters. The more hands-on the activity, the better.

• Ages 6-7: Time to Start an Allowance. How much to give? Start with a basic weekly allowance equal to half the child’s age. Tie the allowance to “financial chores”—spending responsibilities that the kids take over from you. To make the connection between work and pay, give your children the opportunity to earn money by doing extra jobs such as vacuuming or raking leaves.
• Ages 8-10: Bank on It. Help your kids open their own savings account. Should you require your kids to save? Not necessarily—but you can have them divvy up their allowance into pots of money for spending, saving, charitable giving, even investing. Have your children save toward a goal, whether it’s a toy or a new baseball glove. And you can always encourage kids to save by matching what they put aside—for your very own family 401(k).
• Ages 11-13: Parent Power. As you head into the difficult ‘tween years, remember that parents have power. Kids will listen to you if you have a clear message and deliver it consistently. Expand their allowance money to include more discretionary purchases such as video games and movie tickets. Kids shouldn’t hit you up for 20 bucks every time they head to the mall. Having to chip in their own money puts a natural brake on spending. If you’re an investor, introduce them to the stock market with small purchases of stock through sites such as http://www.ShareBuilder.com and http://www.MyStockDirect.com.
• Ages 14-15: Stick With Cash. Parents should decline prepaid debit cards which banks aim squarely at this age group. Stick with cash. Even at this age, plastic of any kind isn’t as real to kids as money they can see and feel. Expand their allowance to include clothing, concerts and other high-school entertainment. Encourage them to get a job—at least over the summer.
• Ages 16-18 and Into College: Hold the Plastic. Teens don’t realize that a credit card is not free money. They need to know that when you use a card, you’re borrowing from the card issuer, which will charge you a high rate of interest. Cash is still king. Help your kids open a checking account (and get a debit card) so they can learn how to balance a checkbook—either by using a check register or online entry—before they head off to college.

The only thing we’d add is that you should custom tailor this list to suit your child. Janet Bodnar, who wrote the article summarized here, strongly believes that no one should have a credit card until they’re a senior in college, and based on the statistics we read about college students it’s almost impossible to argue. However, if you take the time to really and truly educate your child about the benefits of using a credit card wisely (as in, not ever, ever, ever carrying a balance, etc.) then we think you as parents could consider adding your college student as an authorized user on your credit card so you can monitor their expenses and offer guidance. Maybe even consider a charge card where the balance must be paid in full each month.

Again, you know your kid better than a list does, and if you are a kid and you’re reading this list… Congratulations. Maybe you can use this list to teach your parents about money!

The Last Word on Kids and Cash [Kiplingers]
(Photo: Sa_Steve )

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