Hi. I’m Elsa M. from Quicken with advice on how to turn young consumers into smart consumers.
Did you know that teenagers spend more than $100 billion a year? Children under the age of 12 — $11 billion.
How can parents teach kids to spend and save wisely?
Once your children can handle basic arithmetic, let them help plan a grocery shopping trip. Decide how much to spend and then ask for their help in getting the most for your money.
Allowances are a good way to introduce kids to spending and saving their own money. Insist that they save a portion of it and put it in a glass jar so they can watch their savings grow.
When your children reach middle school, open a savings account for them. Explain how money in a bank earns interest on the opening balance, plus interest on the interest, a process called compounding. Children enjoy hearing that their money is working for them.
Ask older kids to write a budget with your help. Then step back. Monitor spending but don’t manage it. They’ll learn from their own mistakes.
When your children reach high school, open a checking or debit account for them. But saving should remain the watchword. By now they should start to grasp the difference between short-term saving for an iPod versus saving for long-term goals such as college.
Supportive parents raise informed consumers.
For more information on budgeting, visit Quicken.com.