Top 10 Ways to Teach Children Fiscal Fitness

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Phoenix Home Life Mutual Insurance Company via
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HARTFORD, Conn., April 9, 1997 -- Phoenix Home Life Mutual Insurance Company -- which sponsors the annual Fiscal Fitness(R) Survey of Americans' financial hopes, dreams and fears -- issued the following "Top 10 Ways to Teach Children Fiscal Fitness":

• 10. Practice Pay Day. Paying your children an allowance on the same day every week enables them to plan how and when to spend the money and to learn from the consequences. Remind children that once allowance money is spent, no more will be available until the following pay day. A Tuesday purchase may mean no movie on Saturday.
  
  
• 9. Divide and Conquer. Encourage children to divide their income into three parts: spending, and short- and long-term savings. By choosing set proportions for these categories, children learn personal finance discipline. Keep the allocated funds separate to ensure that savings are not spent: long-term savings in an investment fund; short-term savings in a bank or fund; and spending in a jar, piggy bank or wallet. You may also encourage children to set aside a small part of their spending money for charity.
  
  
• 8. Bank on Knowledge. Bring your children to the bank and show them how transactions work. Ask the manager for a tour -- be sure to ask to see the vault! Explain different bank functions.
  
  
• 7. Pique Their Interest. Open a savings account for each of your children. Review each bank statement with them to demonstrate how compound interest works.
  
  
• 6. Window Shop. Encourage your children to leave money at home when shopping with you, thereby forcing them to consider and plan ahead for a potential purchase rather than buy on impulse. The item can be purchased on the next trip to the store.
  
  
• 5. You'd Better Shop Around. Next time you make a large purchase, have your children help compare cost and quality at several different stores.
  
  
• 4. Invest in Their Future. Explain how expensive a college education is, but also highlight payoffs (both long- and short-term). Set up a college fund together and encourage your children to contribute.
  
  
• 3. Pay Bills the Fun Way. Using play money, give your children a mock monthly paycheck. To illustrate where that money goes, first take out taxes. Then have them subtract typical monthly living expenses (e.g., rent/mortgage, savings, food, car, utilities, insurance and clothes). They may be surprised how little remains for luxuries.
  
  
• 2. Tax the Family. To demonstrate how tax money benefits a community, have each family member contribute a small percentage of their income into a family tax jar. At the end of the year, decide together how to spend that money.
  
  
• 1. Match Funds. For younger children, agree to match their short-term savings so that no goal is completely out of reach. As your children grow, begin an individual retirement account (IRA) for them under the condition that they contribute a set amount of money each year throughout their young adulthood.
  
  

CONTACT: Alice Ericson of Phoenix Home Life Mutual Insurance Company, 860-403-5946; or Cindy Powell of APCO Associates,
202-778-1024