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|ASK CARRIE- Jean Chatzky Speaks to Parents of Teens: Yes, Your Kids Want to Learn About Money!|
|Written by CARRIE SCHWABPOMERANTZ, Creators Syndicate|
|Thursday, 03 March 2011 02:11|
This week, Carrie interviews Jean Chatzky, financial expert, journalist and author of several books, including "Not Your Parents' Money Book: Making, Spending, and Saving Your Own Money" (FT Press: 2010).
CARRIE: You've written a great book for teens. Can you please tell us what motivated you and what are you hoping that kids (and parents) will take from it?
JEAN: I decided to write this book after years of parents coming up to me and — quite literally — asking for it.
As much as today's adults need financial advice and information, today's teens need it more. They're heading into college during a time of skyrocketing tuition, borrowing more than any generation before, and will very likely emerge into a job market that's still a little shaky.
They're going to be asked to take on more responsibility than their parents and grandparents for their own retirement and for health care. It's imperative that they know what they're doing.
And by the way, they want to know. Before I sat down to write, I conducted focus groups with middle school kids across the country. I asked them not only whether they wanted to know more about money (the answer was a resounding yes) but also what they wanted to know about money. Their answers were very pragmatic.
They want the real dirt on how much they'll have to earn to live a comfortable life, what sort of jobs pay that much and how to get those jobs. They want to know how they can put some money in their pockets today. And they want the skinny on the recession, the problems with credit cards and debt, and other financial issues they see their parents dealing with so that they don't end up in the same boat. I wrote the book with their requests in mind, and I hope that I gave them what they asked for.
CARRIE: As the mother of two teens, I know that you're very close to the teenage brain. For the benefit of other parents (and perhaps grandparents), can you please share some of your best tips for helping teens learn about money?
JEAN: I don't think teens — or anyone for that matter — learns how to handle money until they're in a position of having to manage money. For that reason, I think allowances are good tools. But they have to be used properly (and many parents do it wrong). For an allowance to be effective, the teen has to be put in a position where they are forced to make financial choices. One of the things we don't teach well enough is that money is a limited resource.
As a parent, I know I can't have everything. Well, neither can my kids. So a properly structured allowance comes with a list of items the parent used to buy that are now going to come out of the teen's money. Movies. Video games. Clothes. Snacks. Gifts for friends. Whatever you're sick of buying can go on that list. Then give your teen an allowance big enough to buy some of those items, but not so much that they'll run out of days in the week before they run out of spending money. You want them to think about whether the movie is more important than the gift for their friend, whether they really need another pair of jeans or want to save the money so that they'll have enough next week to buy the new Madden when it comes out. Then, and this is crucial, when they run short, do not bail them out. Do not give them an advance on next week's money. If they want more, they have to earn it. That's lesson number two.
Teens need to learn that work pays. Until they're old enough to work outside the house, I'd suggest posting a list of jobs you would pay outsiders to do but are willing to pay them to take off your hands. The study I commissioned from Harris Interactive for my book The Difference showed that teens who worked — for pay — during high school and college were better managers of their own money as adults.
CARRIE: And are there some approaches or tactics to avoid?
JEAN: I know the stock market games have a long history, but I'm not a fan of focusing on the ins and outs of investing until the basics of managing money — earning it, spending less than you make and saving for particular goals — are down pat.
CARRIE: Given our crazybusy lives, it's often hard for parents to even think about taking on another challenge. What would you say to parents who believe that they just don't have the time for this? Perhaps, you can share some of your experiences with National Money Night Talk?
JEAN: I'm not asking you to add to your schedules but to incorporate financial lessons into the time you already spend with your children. Simply pulling out the cable bill — which your kids have likely never seen — and talking about it over dinner (Why is it so high? What could we do as a family to lower it?) seems like pretty low-stress conversation to me. But just like talking over the world events of the day, it can have a great impact on your kids.
And if you're looking for conversation starters, my conversation guides are available at moneynighttalk.com.
CARRIE: What do you say to parents who may not be feeling all that financially knowledgeable themselves? Should they still be talking to their kids about money? JEAN: Absolutely. Last night I was doing math homework with my daughter and I forgot how to go through the particular process she was being taught.
So we sat down online and looked it up. I think parents gain a certain amount of credibility by being willing to say, "I don't know the answer to that. Let's look it up together." It's definitely true in money. I think it's also true in life.
This column is no substitute for an individualized recommendation, tax or personalized investment advice.