Teach Your Children Well: Low-Cost Ways to Educate Children on Money Management

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MINNEAPOLIS, Jan. 20, 1997 -- Financial planners, parenting professionals and family advisors everywhere are touting the need to educate children on financial facts of life. Among other advice, these groups recommend: opening mutual funds in your children's names, buying them shares of stock in their favorite companies, and above all -- giving 'em an allowance.

With personal bankruptcies sitting at more than a million per year, consumer debt rising faster than income, and a steadily weakening economy in some parts of the country, many parents are finding themselves in financial straits and unable to afford these expensive lessons in fiscal responsibility.

That doesn't mean that school's out. There are ways for financially strapped families to incorporate lessons on spending and using money wisely into their children's everyday life -- without additional expense. Following are some inexpensive money management lessons from the American Collectors Association.

• Even in today's high-tech world, some of the best tools for teaching kids about money are low-tech board games. Available at pocket change prices at garage sales nationwide, some good financial lessons are available through the roll of the dice in The Game of Life, Payday, The Allowance Game, Monopoly and Monopoly, Jr., to name a few.

• Include your children in discussions about family finances. This will help them understand where the family's income is going, what they're getting from it (food, shelter, clothing, etc.) and what it costs to maintain a basic standard of living. Be sure to encourage their input in the budgeting process.

• Determine what portion of your income goes for items -- such as lunch money and clothes -- for your children. Put your child in charge of spending all or part of that money. Allow them to decide what they want to buy for lunch or for school clothes. Consider providing some guidelines such as: at least 20 percent must be spent on fruit, or 30 percent on a pair of dress shoes. If they choose to blow the balance on twinkies and expensive athletic shoes, do not add to their budget. When they realize cream-filled desserts aren't such a great lunch and that they don't want to wear last year's shirts, they'll quickly learn the importance of practical spending.

• When your children are old enough to earn their own money, through babysitting, odd jobs, paper routes or other part-time employment, talk to them about opening a savings account, tracking their spending and creating their own budget. Consider setting up a brief appointment with a financial advisor at your bank.

With approximately 3,600 members worldwide, ACA is the largest international organization of third-party debt collection businesses. ACA members employ roughly 65,000 people and serve nearly one million commercial and retail credit grantors in the United States alone. For more information, visit ACA's web site at www.collector.com.

CONTACT: Elizabeth Walsh or Deborah Mattson of the American Collectors Association, Inc., 612-926-6547 or comm@collector.com