The Saving Seed: Growing a Financially Healthy Family Tree

"I want this!" "Mommy, can you buy me that?" are just a couple of cries that are all too familiar when it comes to buying things for your kids. In many cases, they just don't understand the concept of money and the fact that it doesn't grow on trees. It's important to find ways to let them know the value of money and there's no better person to tell us how than Ashley Parks.

Ashley Bogard Parks, CFP, holds a Bachelors of Business Administration from Texas A&M University and a graduate certificate in Financial Planning from Southern Methodist University. She has been advising clients since 1999 in her hometown of Dallas, Texas, where she lives with her family. Her book, The Saving Seed: Growing a Financially Healthy Family Tree, is available for purchase on her website, www.thesavingseed.com. Here, are her tips for talking to your kids about money...

Kidandcaboodle: What is the right age to introduce the concept of money?

Ashley Parks: "Children begin to count somewhere around age two. And at this age, role play, fine motor skills, verbal development and sense of self are blossoming as well. Each of these areas presents opportunities for introducing the concept of money. A child may not know the difference between a nickel and a quarter, other than one is larger than the other, but they can surely begin to count coins and sort them into like piles. Simple, practical, everyday exercises such as this begin to develop a child’s awareness of money. In your make-believe play, bring in the concept of shopping with one person being the store owner and the other the shopper. Again, simple concepts weaved into everyday life and they’ll be off to a great start. Use money words in everyday experiences. At the store checkout line, verbalize what you’re doing, “I’m now paying the clerk for the groceries we just purchased.” Whether banking online or at a physical branch with your child in tow, verbalize it, “I’m telling the bank how much money to pay for our house,” or “I worked today so I’m putting some money in the bank to save for later.” You’re planting these seeds that will grow into their understanding of money and its uses in the world. Lastly, age two may be the time when the word “mine” is used quite frequently in the household. Introduce the concept of sharing so that when giving is later introduced they have a base to build on. Children can understand more than we may realize. Exposure plants those seeds in them for future growth."

K&C: Any advice on how to teach your kids the value of money?

AP: "We each put a value on what money means to us. One person spending $100 on a haircut may seem well worth it but ludicrous to another. Likewise, that person wanting a $5 haircut may feel that $100 spent on video games was worth the cost. When teaching the value of money, link it back to what your family personally values and where the money goes to fulfill that value. Children may not value money spent until they’ve had to work or sacrifice for it. A child who earns an allowance and has had to save up that hard-earned money to buy something tends to think much longer about spending that money than someone who was handed it. Allowance is a great way to help children start to value money. There are different money issues that should be discussed as a child ages. You need to tailor the lessons to their developmental stages. My book, The Saving Seed: Growing a Financially Healthy Family Tree, goes into detail each stage from Toddler through Teen to give great, practical tips as they go through each stage. You’re not just teaching your children the value of money. You’re teaching them responsibility, consistency, appreciation, confidence and awareness. You’re laying the groundwork for their financial lives."

K&C: How do we help our kids create savings?

AP: Savings must start with some seed money. That seed money is their allowance, money from gifts and other income they have been given or earned. A fun activity to begin is creating a savings jar, spending jar and giving jar. They want to physically see that money, they worked for it and they want to know it’s there! I recommend that any income received is broken down 10% giving jar, 20% savings jar and 70% spending jar. As your children age, you can convert the jars into bank accounts."

K&C: Can you give us some basic terminology they should know?

AP:

a. Money

b. Bank

c. Owe

d. Spend: use now

e. Save/Saving: to be spent later

f. Give: share with others

g. Cash

h. Credit

i. Debit

j. Account

For more great financial advice, or to purchase The Saving Seed: Growing a Financially Healthy Family Tree, go to www.thesavingseed.com.