18 ways to help children learn the value of money

The MONEY INSTRUCTION BOOK and PowerPoint Presentation. Copyright 2004 by Paul Richard, RFC - All Rights Reserved.

National Financial Literacy Month National Financial Literacy Month April 2004April 2004

Teach Young People About Teach Young People About MoneyMoney

from the Institute of Consumer Financial Education – from the Institute of Consumer Financial Education – www.icfe.infowww.icfe.info

National Financial Literacy Month National Financial Literacy Month April 2004April 2004

Teach Young People About Teach Young People About MoneyMoney

from the Institute of Consumer Financial Education – from the Institute of Consumer Financial Education – www.icfe.infowww.icfe.info

18 Ways To Help Children Learn The Value Of Money 18 Ways To Help Children Learn The Value Of Money

10 Commandments of Personal Finance For Young People10 Commandments of Personal Finance For Young People

Allowances, Work or Both? Allowances, Work or Both?

ICFE’s Spender’s ProfileICFE’s Spender’s Profile

ICFE’s Credit Risk Profile ICFE’s Credit Risk Profile

For more information visit: www.icfe.infoFor more information visit: www.icfe.info

TheTheMONEYMONEY

INSTRUCTIONINSTRUCTIONBOOKBOOK

By Paul Richard, RFCBy Paul Richard, RFCICFE Executive DirectorICFE Executive Director


18 Ways To Help Children 18 Ways To Help Children Learn The Value of Money Learn The Value of Money 18 Ways To Help Children 18 Ways To Help Children Learn The Value of Money Learn The Value of Money

1.1. As soon as children can count, introduce them to money.As soon as children can count, introduce them to money.

2.2. Communicate with children, as they grow, about your values concerning money Communicate with children, as they grow, about your values concerning money and how to save itand how to save it

3.3. Helping children also learn the difference between needs, wants and wishes.Helping children also learn the difference between needs, wants and wishes.

4.4. Setting goals is a fundamental concept to help young people learn the value of Setting goals is a fundamental concept to help young people learn the value of money and also how to save.money and also how to save.

5.5. Indoctrinate your children to accumulation (or savings)Indoctrinate your children to accumulation (or savings)..

6.6. When giving children an allowance or income, give money in denominations When giving children an allowance or income, give money in denominations that encourage savings.that encourage savings.


18 Ways To Help Children 18 Ways To Help Children Learn The Value of MoneyLearn The Value of Money18 Ways To Help Children 18 Ways To Help Children Learn The Value of MoneyLearn The Value of Money

7.7. Introduce U. S. Savings Bonds to children. Take them to the bank when you make the Introduce U. S. Savings Bonds to children. Take them to the bank when you make the purchase.purchase.

8.8. Take the youngsters with you to a credit union (or a bank) when you open their Take the youngsters with you to a credit union (or a bank) when you open their savings accounts. savings accounts.

9.9. Keeping good records of money saved, invested or spent is another primary skill Keeping good records of money saved, invested or spent is another primary skill young people must learn. young people must learn.

10.10. Going to the grocery store is usually one of a child’s first spending experiences.Going to the grocery store is usually one of a child’s first spending experiences.

11.11. Take children with you to other stores, explaining how to plan purchases in advance Take children with you to other stores, explaining how to plan purchases in advance and make unit price comparisons and also checking for value, quality, reparability, and make unit price comparisons and also checking for value, quality, reparability, warranty, etc. warranty, etc.

12.12. Allow young people to make spending decisions, both good and poor, and then Allow young people to make spending decisions, both good and poor, and then encourage a discussion of pros and cons before more spending takes place.encourage a discussion of pros and cons before more spending takes place.



13.13. Show children how to evaluate ads on TV, radio and in print. Will the product Show children how to evaluate ads on TV, radio and in print. Will the product really perform and do what the commercials say? really perform and do what the commercials say?

14.14. Look into joining a credit union, if you are not a member already. Look into joining a credit union, if you are not a member already.

15.15. Alert children to the dangers of borrowing and paying interest. Alert children to the dangers of borrowing and paying interest.

16.16. If parents are using credit cards, at a restaurant for example, take advantage of If parents are using credit cards, at a restaurant for example, take advantage of an opportunity and explain to children how to verify the charges, how to an opportunity and explain to children how to verify the charges, how to calculate the tip.calculate the tip.

17.17. Be cautious about making credit cards available to young people even when Be cautious about making credit cards available to young people even when they are entering college. they are entering college.

18.18. Using a calendar, establish a regular schedule for a family discussion about Using a calendar, establish a regular schedule for a family discussion about finances. finances.



SUMMARY:SUMMARY: Money gives people - both young and older - decision-Money gives people - both young and older - decision-making opportunities. Everyday spending decisions can have a far greater making opportunities. Everyday spending decisions can have a far greater negative impact on your children’s financial future (and yours also) than negative impact on your children’s financial future (and yours also) than any in vestment decisions they (or you) may ever make. Educating, any in vestment decisions they (or you) may ever make. Educating, motivating and empowering your children to become regular savers and motivating and empowering your children to become regular savers and investors will enable them to keep more of the money they earn and do investors will enable them to keep more of the money they earn and do more with the money they keep!more with the money they keep!


10 Commandments of 10 Commandments of Personal Finance for Personal Finance for

Young PeopleYoung People

10 Commandments of 10 Commandments of Personal Finance for Personal Finance for

Young PeopleYoung People1) Manage your expenses so they don’t exceed 1) Manage your expenses so they don’t exceed

your income.your income.2) Spend money thinking about your future as 2) Spend money thinking about your future as

well as your present.well as your present.3) Begin saving early to take advantage of 3) Begin saving early to take advantage of

compound interest, because it’s not compound interest, because it’s not retroactive. retroactive.

4) Avoid collecting credit cards for borrowing.4) Avoid collecting credit cards for borrowing.


10 Commandments…10 Commandments…10 Commandments…10 Commandments…

5) Always honor your debts and other financial 5) Always honor your debts and other financial obligations.obligations.

6) Project income and expenses for 12 months 6) Project income and expenses for 12 months and track any variances from month to month.and track any variances from month to month.

7) Focus on the relationship between the risk 7) Focus on the relationship between the risk and the projected return of investments. It’s and the projected return of investments. It’s one thing to get a return on your investment, one thing to get a return on your investment, it’s another to get all of your initial investment it’s another to get all of your initial investment back.back.


10 Commandments…10 Commandments…10 Commandments…10 Commandments…

8) Maintain and organize records for tax and 8) Maintain and organize records for tax and also general financial planning purposes.also general financial planning purposes.

9) Have a plan and a purpose for your 9) Have a plan and a purpose for your investing.investing.

10) Obtain a financial education to be in a 10) Obtain a financial education to be in a position make intelligent financial decisions.position make intelligent financial decisions.


Allowances Allowances . . . . or or Work Work . . . . or Both?or Both? Allowances Allowances . . . . or or Work Work . . . . or Both?or Both?

The question of allowances is often raised by parents and The question of allowances is often raised by parents and children alike. While it is a personal decision, the concept of children alike. While it is a personal decision, the concept of giving an allowance and having work income seems to work giving an allowance and having work income seems to work best. Parental goals, when paying an allowance, should be to:best. Parental goals, when paying an allowance, should be to:

1)1) Shift some spending decisions from parents to the child.Shift some spending decisions from parents to the child.

2)2) Eliminate or dramatically re duce the need for the child to have Eliminate or dramatically re duce the need for the child to have to ask for money.to ask for money.

3)3) Provide a method, under proper supervision, for learning Provide a method, under proper supervision, for learning about accumulating money and also wise spending techniques.about accumulating money and also wise spending techniques.


Allowances Allowances . . . . or or Work Work . . . . or Both?or Both?Allowances Allowances . . . . or or Work Work . . . . or Both?or Both?

Birth to age 8Birth to age 81) Assign basic household chores (make the bed)1) Assign basic household chores (make the bed)2) Don’t buy toys on demand2) Don’t buy toys on demand3) Allow them to learn about actions and con -3) Allow them to learn about actions and con -sequences (having possessions also brings sequences (having possessions also brings responsibilities).responsibilities).


Ages 9 to 13Ages 9 to 13

1) Allow child to begin making spending decisions on 1) Allow child to begin making spending decisions on their own. Encourage comparison shopping.their own. Encourage comparison shopping.

2) Give a specific allowance and stick to it.2) Give a specific allowance and stick to it.3) Don’t pay youngsters for doing basic chores, 3) Don’t pay youngsters for doing basic chores,

because if you do, the day may come when a child because if you do, the day may come when a child will refuse to clean their room because they don’t will refuse to clean their room because they don’t need money.need money.



Ages 13 and olderAges 13 and older

1) Be consistent - continue to have daily 1) Be consistent - continue to have daily household chores – no child should be too busy household chores – no child should be too busy to pick up after him or herself.to pick up after him or herself.

2) Help your child forget her or himself. A great 2) Help your child forget her or himself. A great family activity is donating time and or money to a family activity is donating time and or money to a worthy cause.worthy cause.



Are you a good spender?Are you a good spender?Try the ICFE’s Spender’s Try the ICFE’s Spender’s

ProfileProfile

Are you a good spender?Are you a good spender?Try the ICFE’s Spender’s Try the ICFE’s Spender’s

ProfileProfilePractically everyone loves to spend their money, Practically everyone loves to spend their money,

but how good of a spender are you these days?but how good of a spender are you these days?Are you getting the most value for your dollar?Are you getting the most value for your dollar?The ICFE Spender’s Profile consists of 20 The ICFE Spender’s Profile consists of 20

statements about your spending life-style. statements about your spending life-style. Instructions follow on the next slideInstructions follow on the next slide

A scoring module is at the end of this section.A scoring module is at the end of this section.


Using a sheet of paper…Using a sheet of paper…Using a sheet of paper…Using a sheet of paper…

Answer the following 20 statements with one of Answer the following 20 statements with one of the following five responses.:the following five responses.:

1) totally like me1) totally like me2) A lot like me2) A lot like me3) Equally like and unlike me3) Equally like and unlike me4) A little like me4) A little like me5) Not like me at all5) Not like me at all


ICFE’s Spender’s ProfileICFE’s Spender’s ProfileICFE’s Spender’s ProfileICFE’s Spender’s Profile

1) Each time I get any money, I put a small 1) Each time I get any money, I put a small amount of cash aside as savings.amount of cash aside as savings.

2) Each time I receive any money I usually 2) Each time I receive any money I usually Deposit it into a savings or checking account.Deposit it into a savings or checking account.

3) I keep track of the money I receive from all 3) I keep track of the money I receive from all sources.sources.

4) I set aside a predetermined amount of my 4) I set aside a predetermined amount of my cash for regular weekly expenses.cash for regular weekly expenses.



5) I set aside at least ten percent of the money I 5) I set aside at least ten percent of the money I receive for savings.receive for savings.

6) My money is managed according to a written 6) My money is managed according to a written spending-plan.spending-plan.

7) My food, grocery and household spending is 7) My food, grocery and household spending is planned in advance and done with a list.planned in advance and done with a list.

8) I rarely make less than two trips-a-week to a 8) I rarely make less than two trips-a-week to a grocery or convenience store. grocery or convenience store.


ICFE’s Spender’s ProfileICFE’s Spender’s ProfileICFE’s Spender’s ProfileICFE’s Spender’s Profile9) Grocery, household coupons and 9) Grocery, household coupons and

manufacturer rebates are used whenever manufacturer rebates are used whenever possible.possible.

10) Comparison shopping for price, value, quality 10) Comparison shopping for price, value, quality is something I do for practically every purchase.is something I do for practically every purchase.

11) I do not have credit cards with a balance 11) I do not have credit cards with a balance due.due.

12) I do not have any loans with a balance owed.12) I do not have any loans with a balance owed.13) I have comparison shopped for both food 13) I have comparison shopped for both food

and clothing in the last year.and clothing in the last year.



14) I do not dine/eat out more than once a-week.14) I do not dine/eat out more than once a-week.15) I have received my earnings statement from 15) I have received my earnings statement from

the Social Security Administration.the Social Security Administration.16) I account for all my cash spending by 16) I account for all my cash spending by

collecting receipts and noting what is bought.collecting receipts and noting what is bought.17) I balance my checking/share draft accounts 17) I balance my checking/share draft accounts

with each statement received.with each statement received.



18) I have looked into joining or I am a member 18) I have looked into joining or I am a member of a credit union.of a credit union.

19) I am saving money towards a college 19) I am saving money towards a college education.education.

20) I have given money or food to less fortunate 20) I have given money or food to less fortunate individual within the last month.individual within the last month.

Total up your points for all 20 questionsTotal up your points for all 20 questions


ICFE’s Spender’s Profile ICFE’s Spender’s Profile ScoringScoring

ICFE’s Spender’s Profile ICFE’s Spender’s Profile ScoringScoring

17-27 points - Terrific! - Teach others.17-27 points - Terrific! - Teach others.28-42 points - Pretty good - Stay Up-to-date28-42 points - Pretty good - Stay Up-to-date43-58 points - Average - A class will be helpful43-58 points - Average - A class will be helpful59-74 points - Lousy – Make needed changes 59-74 points - Lousy – Make needed changes 75+ points - It Stinks! – Make an immediate 75+ points - It Stinks! – Make an immediate

appointment with a bona fide, nonprofit appointment with a bona fide, nonprofit Consumer Credit Counseling organization.Consumer Credit Counseling organization.


ICFE’s Credit Risk ProfileICFE’s Credit Risk ProfileICFE’s Credit Risk ProfileICFE’s Credit Risk Profile

Are you seeking credit for the first time? Or are Are you seeking credit for the first time? Or are you seeking more credit, like more credit cards?you seeking more credit, like more credit cards?

If so, Will you be a good credit risk?If so, Will you be a good credit risk?The credit risk profile, with true or false The credit risk profile, with true or false

questions, may help you understand how well questions, may help you understand how well you might manage credit-based spending and you might manage credit-based spending and also provide insight as to why you want credit.also provide insight as to why you want credit.


Answer the following 15 questions true or falseAnswer the following 15 questions true or false1) Having a credit card will give me (give me) a 1) Having a credit card will give me (give me) a

sense of security.sense of security.2) I purchase more (expect to purchase more) from 2) I purchase more (expect to purchase more) from

retailers who will extend me credit.retailers who will extend me credit.3) I often pay for eating out or purchase gifts to 3) I often pay for eating out or purchase gifts to

impress others.impress others.4) Credit cards (will) help me improve my life-style.4) Credit cards (will) help me improve my life-style.

ICFE’s Credit Risk Profile Using a sheet of paper …..

ICFE’s Credit Risk Profile Using a sheet of paper …..


ICFE’s Credit Risk ICFE’s Credit Risk Profile……Profile……


5) Having credit allows me to buy the things I 5) Having credit allows me to buy the things I want now.want now.

6) I often argue with myself or family members or 6) I often argue with myself or family members or others about over-spending.others about over-spending.

7) My savings account balance is negatively 7) My savings account balance is negatively affected by credit-based spending.affected by credit-based spending.

8) I often have trouble recounting the money I 8) I often have trouble recounting the money I have spent during the day.have spent during the day.


ICFE’s Credit Risk ICFE’s Credit Risk Profile…..Profile…..

ICFE’s Credit Risk ICFE’s Credit Risk Profile…..Profile…..

9) Other people I know overspend, and it 9) Other people I know overspend, and it doesn’t seem to hurt them financially.doesn’t seem to hurt them financially.

10) My closet if full of things I have only used 10) My closet if full of things I have only used once or twice.once or twice.

11) Many things I purchase, I wish I hadn’t by the 11) Many things I purchase, I wish I hadn’t by the time I get home.time I get home.

12) I am often (can be) a few days late with 12) I am often (can be) a few days late with some payments, but it doesn’t matter muchsome payments, but it doesn’t matter much




13) I have borrowed money from friends and 13) I have borrowed money from friends and relatives that I have not repaid.relatives that I have not repaid.

14) I make impulse purchases to make me feel 14) I make impulse purchases to make me feel better.better.

15) I charge things like meals, gas and groceries 15) I charge things like meals, gas and groceries that are gone when the bill arrives.that are gone when the bill arrives.

Now add up your true(s) and false(s) – scoring nextNow add up your true(s) and false(s) – scoring next


ICFE’s Credit Risk Profile ICFE’s Credit Risk Profile ScoringScoring

ICFE’s Credit Risk Profile ICFE’s Credit Risk Profile ScoringScoring

None True: A credit worthy person.None True: A credit worthy person.1 or 2 True: Just barely “OK”1 or 2 True: Just barely “OK”3 – 5 True: Suspend credit-based spending.3 – 5 True: Suspend credit-based spending.5 –10 True: You may be a “debt-head”5 –10 True: You may be a “debt-head”11-15 True: A confirmed plastic addict.11-15 True: A confirmed plastic addict.Put those credit cards in a glass of water and Put those credit cards in a glass of water and

freeze them solid. More help onfreeze them solid. More help on www.icfe.info


This PowerPoint presentation is made available This PowerPoint presentation is made available as a public service in recognition of National as a public service in recognition of National Financial Literacy Month – April 2004 by the Financial Literacy Month – April 2004 by the award winning Institute of Consumer Financial award winning Institute of Consumer Financial Education (ICFE) ICFE - PO Box 34070, San Education (ICFE) ICFE - PO Box 34070, San Diego, CA 92163Diego, CA 92163

www.icfe.infoOther PowerPoint presentations availableOther PowerPoint presentations available

The Institute of Consumer Financial Education

The Institute of Consumer Financial Education

18 ways to help children learn the value of money

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