Whether children are 5 or 15, parents can help them learn to handle money. "To raise the financially savvy child, parents need to take an active role," says Alex Matjanec, co-founder of MyBankTracker.com, a website that helps consumers research banks. Here are some suggestions:
Ages 5 to 9
Children probably have money from grandparents, aunts and uncles or the Tooth Fairy. Buy a piggy bank the child can paint or decorate instead of sticking money in a plastic jug, Matjanec advises.
Start simple, concrete lessons. At a restaurant, show children the check, talk about tip calculation, give them cash and let them pay and get change. As children advance, they can calculate tips themselves.
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Do this at fast-food and fancy restaurants, says Cathy MacFarlane, spokeswoman for the online bank Ing Direct.
"The child begins to know the difference between the cost of a hamburger at a fast-food restaurant versus a hamburger at a white tablecloth restaurant," MacFarlane says.
It's healthy to talk about whether an item is in your budget and spending choices, she says.
By age 10
Once kids amass $100, reach age 10 or earn regular cash, open a savings account, Matjanec says. Look for a fee-free program tailored to kids, he advises. Matjanec recommends joint accounts with a parent so the parent can peruse statements and maintain control.
First National Bank of Long Island, for instance, has a program called the K Savings Account, K for "Kids" in first through eighth grades.
"Basically, it's the old-fashioned passbook account, which the kids just love," says Michael Vittorio, president and chief executive. Children earn 2.25 percent interest for 90 days, then 1.05 percent. Bank representatives work with schools, explaining to children what it means to save. The bank doesn't charge for the accounts, Vittorio says.
Ingdirect.com, an online bank, launched an online child savings account in November with no minimum balance or fees.
"A child can have $2 in it and we're not going to charge them for it," MacFarlane says. Check your local bank branch for similar programs.
Ruviina Nanoo of Plainview, N.Y., opened a K account for each son, Bradley, 5, and Brandon, 4, in part because the kids' accounts offered higher interest rates.
"They know we go and take the money to the bank and it's for them," she says.
To encourage savings, a goal helps.
"The idea of saving for kids is very boring," Matjanec says.
Saving to buy an iPod is better. MacFarlane suggests having the child keep half of gifts to spend and put half in the bank. Parents might want to match a percentage for incentive.
"Saving is an abstract concept," she says. "All they know is that they don't have that money to spend as they want."
Give children financial freedom regularly, MacFarlane says. Give in to immediate gratification, but explain the consequences. Say, "If you buy this toy, you won't have money to go to the movies next week." Then stick to it.
In high school, a checking account with debit card can be introduced. Parents should review statements to say, "'You spent $100 at McDonald's. What else could you have done with that money?' " Matjanec advises.
Suggest the child could have purchased a video game, for instance.
Companies have introduced "prepaid" card accounts into which parents or kids deposit a certain amount of money. Kids then use them as a sort of credit card. Matjanec isn't a fan because of transaction fees, usage fees and/or inactivity fees.
Many high schools offer classes in financial literacy. Eric Gomez has taught at Baldwin High School in New York and says by that age, students can learn about certificates of deposit, interest, and stocks and bonds. Gomez says some teachers have students track their spending for a week or two to learn what they are wasting on useless items.
"Parents can do that with their kids as well," he says.
MacFarlane suggests giving teens "The Gift of Stock," which is $45 they can use toward buying shares of stock on Sharebuilder.com. They can purchase stock in a popular clothing store or restaurant they frequent, learning that, as a shareholder, they own part of the business, she says. "It's an interesting way to get them engaged."
Where kids can learn more
For elementary and middle school students
* Ingdirect.com's Planet Orange at orangekids.com takes children on an educational journey into working, saving, spending and investing, led by avatars Amy and Cedric. For first- to sixth-graders.
* The Great Piggy Bank Adventure at thegreatpiggybankadventure.com is a free online game created by Walt Disney Imagineering and T. Rowe Price for ages 8 to 14.
* Investor Warren Buffett has an online cartoon called The Secret Millionaire's Club at smckids.com.
For high school students
* Teens could read "The Millionaire Next Door: Surprising Secrets of America's Wealthy" (Taylor Trade, $16.95) by Thomas Stanley and William Danko, which introduces concepts such as living below your means.
* FoolProofme.com has a video series called "Burning Money" that addresses potential bad decisions that may hurt kids' financial health, such as how a late payment now can adversely affect jobs, apartments and loans in the future.