Raising Responsible Debtors - Money and Kids

My six-year-old picks up every coin he finds and puts it in a cup with color-crayon drawings of Sonic the Hedgehog around it. It's his "Game Stop Cup". He's saving his money for a video game for his Wii. I can't take much credit for this. He wanted a new video game and decided to be resourceful about it. So, when change accidentally falls out of my pockets, there he is to pick it up.

The five-year-old, on the other hand, lives in the moment. She taped her dollar bill to the wall so she could "watch it". Her logic amuses me. Her method of getting what she wants from the store is asking 25 times and wearing me down. We have some work to do.

The twelve-year-old has no problem saving. She'd much rather spend someone else's money, though. When she's forced to use her own money, she'll think twice about whether the item is worthy enough to buy.

I remember being in seventh grade when a teacher asked us how many of us had bank accounts. My first thought was, "What a stupid question. We're kids". Then, more than half of the class raised their hands. Since my late teens, when I was working and did open a checking account, I struggled with managing my finances. My parents were buried in financial trouble so I took to figuring out money management on my own. I was terrible at it.

In our country's current financial state, we need to find ourselves obligated to teaching our children the absolute importance of financial management. At all ages, there are opportunities for teaching lessons. A perfect lesson opportunity: My middle child, when he was a bit younger, wanted something that I told him I didn't have the money to get. He casually advised that we should go to the store and get the money from the person who gives it to us. He was referring to the cashier who hands us our change or cash back on debit purchases.

I then spent a few minutes explaining the purchase transaction process. Our kids do need to know what's going on. They don't need to be made aware of every household bill or be concerned if money's tight. They should, however, understand that leaving the lights on causes the electric bill to go up and that this can have consequences on your ability to buy them things; cause and effect.

Issuing an allowance is one of the best ways to teach our kids about financial management. Allowance can be based on good behavior at home and/or in school as well as on household chores. Create a chart, offering a visual aid of their progress. Help them set up a way to save their money.

For older kids and teens, open a student checking account. You usually have visibility into the account (I recommend ensuring the account you set up allows for that). Ensure your kids are properly taught about how to utilize their debit card and managing their spending to avoid fees.

A very important lesson to teach your teen is about credit card management. Credit card companies are infamous for granting credit to college students, employed or not. Many young adults are not equipped with financial know-how and spend like they have free money, creating financial disaster. By teaching them how to utilize a credit card, you're giving them the opportunity to build a strong credit profile for future use. The Visa Buxx card is a great tool for this lesson.

As a generation that typically loves to spend more than we can afford, we should be passing on the lesson that it's much better to live within your means. Remind our kids (and ourselves) of what's really important and deserving of our hard-earned money. We need the next generation to do a much better job than we have. Somehow, everything in our lives needs to be super-sized these days: food, cars, jewelry - not to mention the size of our debt. Where did we get that from? Our kids are watching us. We need to lead by example also.

Krissie Hudson aka The Debt Mommy is the founder of Marie-Daniel Consultation Services, a do-it-yourself debt settlement service. As a mother to three, she understands the challenges of raising a family in today's economy. She offers advice for families on her blog. Ms. Hudson utilizes her industry-related experience to advocate for consumers. A popular quote of hers is, "Stop letting financial institutions live their American dreams off of your hard-earned dollars".

With her company's concentration being on do-it-yourself debt settlement, Marie-Daniel Consultation Services offers personalized guidance to individuals interested in learning how to effectively settle debts with their creditors. Consultants offer an overall analysis of clients' financial situation, suggesting alternate routes that may be a better option.

When not working or researching, Ms. Hudson is spending time with her children, watching Law & Order or shopping at the nearest Wal-Mart.