9 ways to make your kids smarter about money-By Jonathan Clements

Teach lessons about money using ordinary life

Thinkstock

Forget having the talk. Instead, have many talks.

If you sit your children down and endeavor to share all of your hard-earned financial wisdom, you likely will quickly lose your audience. A better approach: Try to weave small financial lessons into everyday conversations, building up your children’s money savvy with repetition and real-life examples.
“The whole ‘Pull back the curtain and share the information’ may make great movies, but it doesn’t make great real life,” says Holly Isdale, founder of Wealthaven in Bryn Mawr, Pa., which advises wealthy families on financial issues. “You have to have these discussions all along. Everything is a teaching moment.”
Want to raise money-smart children? Here are nine ways to boost their financial acumen:
Discuss their allowance. Barbara Nusbaum, a New York psychologist specializing in the emotional side of money, advises having children divvy up their weekly allowance into three buckets: spend, save and share.
“An allowance is invaluable,” she says. “That allows you to have small talks about money all the time,” including what your children plan to buy, what they are saving for and what charities they want to support.
Review the cellphone bill. “When my daughter graduated elementary school and got her first phone, I took the chance to dive into the phone bill,” says Tim Ranzetta, founder of NextGenPersonalFinance.org, which offers personal-finance educational materials for high-school and college students.
With his daughter, now age 12, Ranzetta emphasized that data usage drives the total monthly cellphone bill, which is why it is worth using Wi-Fi networks whenever they are available.
Share the credit-card bill. As financial statements arrive, you might review them with your children. For instance, you could show them the credit-card bill, discuss how easy it is to overspend with a credit card and point out how much interest you would be charged if you didn’t pay off the balance.
Pull your credit reports. If you go to AnnualCreditReport.com, you can get free copies of your credit reports from the three major credit bureaus.
It is a good idea to review these reports regularly to make sure there are no errors and no accounts have been opened in your name without your knowledge. While you are at it, show them to your children and take the chance to discuss the loans you have taken out, when it makes sense to borrow and the importance of making loan payments on time to maintain a good credit score.
Visit the cash machine. Ranzetta has his daughter shield the keypad when he punches in his personal identification number. He uses that as a chance to discuss the importance of protecting personal information and avoiding identity theft.
Open a bank account. This summer, Ranzetta plans to open a checking account for his daughter. But first, he is going to prod her to review the account agreement, with a particular focus on whether she wants overdraft protection.
If she opts for the protection, she won’t have to worry about her debit-card purchases being denied—but she could get hit with a $35 fee every time she overdraws. “Kids are going to tune in a lot more when it’s real,” Ranzetta says.
Go grocery shopping. The supermarket offers a chance for all kinds of money conversations, including why items are priced at $3.99 rather than $4, how to use unit pricing to find the best deal and why sugary cereals are placed where children can easily see them.
It also is a great opportunity to discuss needs and wants. “In our culture, there’s a deliberate confusion of needs and wants,” Nusbaum says. “As parents, we need to help our kids figure out the difference.”
Explain the auto policy. When your teenagers get their driver’s licenses, you will need to add them to your auto insurance. You might show them the revised policy, discuss the big jump in premium that comes with adding a young driver and talk about the different parts of the policy, including deductibles and the importance of liability coverage in case you get sued.

Revisit the week’s highlights. “At dinner, have a conversation about what happened this week that you’re grateful for,” Nusbaum suggests. “Your kid says, ‘l love my dance class.’ And you can say, ‘How did those classes come about?’”

That can be a chance to talk about where the money came from, how much the family spends each month and how you set financial priorities based on what you think is important.

These frequent conversations can make parents uncomfortable, especially when it involves talking about their own finances. But if you don’t teach your children about money, they will be left to learn from others—and you might not like the result.

“Many parents don’t want to talk about money,” Nusbaum notes. “But if you don’t, you’re abdicating responsibility.”

Culled from money watch