Teaching your kids about dollars and sense

September 19 , 2005: The earlier the better ? that?s a good guideline when it comes to teaching your kids about money. After all, as your kids grow into adults, their ability to earn, acquire and manage money will have a powerful effect on their lifestyle and their ability to establish and realize longer-term financial goals.

You can help equip your kids with the essential knowledge and skills they need to manage their money, maintain control over their financial affairs and stay squarely on the road to financial freedom. To get you started, here are some simple money-smart tips you can pass along to your youngsters.

Count on it As soon as your kids can count, it?s time to introduce them to the concept of money. Talk to your kids about money in the larger context of what really matters to them in their life. Explain that money needs to be taken seriously, but it?s also meant to be enjoyed. The key is to be responsible with money so it will be there when it?s needed, for whatever reason ? to pay bills, to support a worthwhile cause, or just to have fun.

Start the savings habit early. Give your kids a piggy bank and a coin every once in a while so they can watch their savings grow. And when they?re old enough, let them graduate to a ?real? bank account and explain that their money will now grow even faster through the magic of interest. Your financial institution likely has special children?s accounts and easy-read literature that will aid in your kids? money education.

Make allowances As your kids grow, give them an allowance tied to the completion of certain tasks like taking out the garbage or mowing the lawn. Make it for a fixed amount so your kids will begin to understand they have choices to make about what they should spend or save. Open a second savings account for them where at least 10 per cent of their allowance must be deposited as a ?reserve? for special expenses or to invest.

Be buy smart Use shopping trips to show your kids the difference between buying something because ?I just gotta have it,? and buying selectively to fill a real need according to what they can afford. When they?re old enough, introduce your kids to the concepts of debit and credit, how credit is charged and the fact that credit cards (especially retail cards) often carry very high interest rates.

Help your kids evaluate product advertising. Explain how to spot over-the-top claims that actually are too good to be true. That toy looked awesome in the TV commercial ? but is it really that good? This print ad says a product is on sale, but is it really a bargain or are there alternative products that can do the job for a lower price?

Money talk pays As your children grow, gradually involve them in your family finances. Show them the value of setting realistic budgets according to income and of periodically reviewing and resetting budget goals to stay on track and to save for the future.

These days, more than ever before, kids need to be money smart. So start their education now ? and if you need help with your ?dollars and sense? conversations, bringing in a professional financial advisor can pay big educational dividends.

This column, written and published by Investors Group Financial Services Inc., is presented as a general source of information only and is not intended as a solicitation to buy or sell investments, nor is it intended to provide professional advice including, without limitation, investment, financial, legal, accounting or tax advice. For more information on this topic or on any other investment or financial matters, please contact your Investors Group Consultant.