With the U.S. financial system foundering and the job market growing bleaker by the minute, many of today’s parents are struggling just to stay afloat. They must deal with issues concerning mortgages, foreclosures, unemployment and retirement – and teaching their kids healthy money management skills, an intimidating task at best.
Charleston native Jennifer P. Streaks is a skilled financial services attorney based in Washington, D.C. With more than 10 years of experience in the areas of finance, investment management and securities, she is a highly-sought-after professional. She is a financial expert for US News and World Report, as well as a financial contributor for WUSA9, Washington’s CBS affiliate.
Streaks graciously agreed to share her esteemed counsel and advice on how best to teach children about money.
LR: At what age should parents begin teaching their children about money and financial responsibility?
Streaks: Parents should start teaching kids about money as soon as they start asking for things. Explain to children how you go to the store and make a purchase. Take them grocery shopping, and make sure they see you pay at the register.
LR: Most kids live by the naive notion that money grows on trees. How can parents combat this idea and replace it with responsible behavior and good money management skills?
Streaks: Parents should talk about saving money with their kids. I remember my first piggy bank and hearing the coins drop in and seeing it add up. A great idea is to take the kids to a Coinstar machine. Exchange the coins, take it to the bank, and deposit it into a savings account.
LR: Can earning allowances help children become more financially aware? What are your suggestions for an effective allowance plan?
Streaks: An allowance is a good way to explain money, financial management and the world of work to a child. Give the child a weekly or biweekly allowance based on chores around the house or school grades, and then have a periodic discussion about what they want to do with the money. This can lead to a good discussion on saving versus spending.
LR: Do you recommend that children have their own personal checking accounts?
Streaks: I would not start a child off with a checking account. I think this is a senior year lesson. You can teach them how to use a checking account by having them pay for their senior year expenses from this account. Kids can definitely have a savings account. They should make deposits and go over the bank statements they get in the mail.
LR: Should parents encourage their children to save?
Streaks: My dad always told me that I should save a portion of any money I receive. Parents should definitely encourage their kids to save. If they get an allowance or money from grandparents, a portion should go into savings so they can develop good financial habits now.
LR: How can parents teach their kids about investing? Should parents require their children to set money aside for charitable purposes?
Streaks: I would talk to kids about investing or setting money aside for charitable purposes once they were a little older – definitely teenagers.
LR: What is the most valuable financial lesson parents can teach kids concerning the current state of the U.S. economy?
Streaks: The most valuable lesson parents can teach kids about the current state of the economy is to make sure you have a financial parachute. Jobs are no longer guaranteed to last, and you must have adequate savings to cover expenses. A financial parachute, or backup plan, is a savings account with at least eight months worth of expenses, an emergency account that has $1,000 to $2,000 in it and adequate insurance coverage in all areas.
For more information and tips concerning financial management, visit Streaks at www.JenniferStreaks.com.
