Teaching dollars and sense

August 15, 2013|By MARIE GILBERT |
  • Experts say children will emulate their parents financial habits, so its best to pay bills on time, be a conscious spender and an active saver.
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If William Neil Cummins had a flashpoint moment about how his children viewed money, it came during a shopping trip and a debate on whether or not to buy a particular item.

“Just get out the plastic thing,” Cummins recalled his daughter saying, referring to a credit card.  “Obviously, she didn’t realize that you get a bill in the mail that needs to be paid.”

As a financial services and investment adviser for MetLife, it didn’t take Cummins long to sit his children down and have the talk. It wasn’t about good manners or the importance of making good grades. It was a discussion about dollars and sense.

With adult spending often out of control and credit becoming a way of life, Cummins agrees with money experts who say it’s never too early to discuss money with children.

It’s important, he said, to explain the different between needs and wants, the value of saving and budgeting and the consequences of not doing so.

Such lessons, says the American Bankers Association, can help the younger generation avoid bad spending habits that can lead to a lifetime of debt and financial ruin.

Cummins said he and his wife began teaching their three children about saving and spending when they were about 6 years old. They are now 10, 12 and 14.

“At 6, they were old enough to realize that there is a value to money and you can’t just buy everything you want,” he said.

The couple also stressed the importance of saving money, he noted, “starting with a small allowance for completing household chores.  They learned very quickly that they could buy nicer things by saving over time and not spending the money as soon as they got it.”

Cummins said the children began saving the old-fashioned way — dropping pennies, nickles and dimes into a piggy bank.

“When they were old enough, we changed from piggy banks to envelopes.  When they received money for birthdays, First Communions, Confirmations, we would put the money into an envelope that they could use when they wanted to buy something. When the envelopes accumulated a certain value, we opened savings accounts. I now show them their statements when we get them in the mail. The challenge with the savings accounts is that the values are not really growing because interest rates are so low. But they understand the concepts.”

The next step in their financial education, he said, “will be to introduce them to the stock market. My plan is to buy stocks with their money that they can relate to — companies such as UnderArmour, Starbucks and Apple.”

Cummins said there are simple ways parents and adults can teach children about saving and spending, including trips to the mall or grocery store.

“We used to pay for items they wanted and then they would pay us back at a later time,” he said. “That didn’t work very well. So, we now make them carry their own money when they want to go shopping. They’ve learned very quickly how easy it is to spend all their money when they have to hand it to the cashier and now they think twice before spending.”

Early in his life, Cummins said, he made money by delivering newspapers, cutting grass and shoveling snow.

“I also spent a lot of money because I had it to spend,” he added. “Now, the only debt I carry is my home mortgage. Everything else gets paid off monthly. I’m teaching my children the same concepts I learned.”

But Cummins said there is one mistake he made that he still regrets — not saving more money earlier in life.

It’s a mistake he doesn’t want his children to repeat and something that he believes can give them a financially secure future.

Plus, he joked, “I don’t want them living at home forever.”

How to help kids be pennywise

Since 1997, the American Bankers Association has offered a national program that organizes bank volunteers to help young people develop a lifelong savings habit.  During that time, some 13,500 bankers have taught savings skills to six million students.

The ABA also sponsors Get Smart About Credit, a national campaign of volunteer bankers who work with young people to raise awareness about the importance of using credit wisely. This year, Get Smart About Credit will be celebrated on Oct. 17, with bankers connecting with youth and adults for credit-education lessons throughout the month.

More information on the programs can be found at

The American Bankers Association offers the following finance tips for children:

1. Talk openly about money with your kids. Communicate your values and experiences with money.  Encourage them to ask you questions and be prepared to answer them — even the tough ones.

2. Explain the value of saving and budgeting and the consequences of not doing so.

3. Set up a chore chart and give your children an allowance for completing their tasks.  Require them to save at least a small portion each week. The three jars method — one for saving, one for spending and one for charitable contributions — is a good way to impart a sense of responsibility.

4. Open a savings account at your local bank for your children and take them with you to make deposits so children can learn how to be hands-on in their money management.

5. Children tend to emulate their parents’ personal financial habits, so be an example of a responsible money manager by paying bills on time, being a conscious spender and an active saver. 

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Experts say children will emulate their parents’ financial habits, so it’s best to pay bills on time, be a conscious spender and an active saver.

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