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If your kids are going back to school, now is a great time to educate them about money.

Baby boomers were taught to save for a rainy day. The younger generations? Not so much. Still, parents must realize that they are part of the problem - and the solution. If children don't hold part-time jobs, an allowance is probably their only money source. Nowadays, is it still valid to give your child \$1 per year equal to their age (age 16 = \$16)? Considering a ticket to the movies costs about \$10, that doesn't leave a lot of room for anything else.

Of course, children might earn money by doing household chores or other types of work, so regardless of how much money they earn, it's up to parents to teach them how to use it wisely. Here are some useful tips:

School-Age Children

• Start early. If your child can count, introduce him/her to money by counting something simple, such as pennies or nickels. Children are sponges, so teaching them about money when they are very young gives parents the opportunity to pass on life lessons on money-saving philosophies.
• Discuss saving vs. spending. Have you ever thought about paying your children interest on pocket change they keep in a jelly jar? If they are old enough to understand basic math, you can teach them about compound interest and how it is calculated. Undoubtedly, they will soon see how quickly interest accumulates.
• Give an allowance in whole-number denominations. If you give \$5, give them five \$1 bills and suggest they put part of it in savings.
• Open up a savings account. As basic as this seems, many children do not have their own savings account. Taking them by the hand to the bank or credit union will be a great learning experience - and probably something they will remember for the rest of their lives. Find an interest-bearing account that does not require any kind of minimum deposit. Put it in the child's name and show them how to check their balances online. This puts the power directly in their hands.

Teenagers

• Create a simple budget. Show your teens how money goes in and out by creating a paper-based budget with two columns.
• Have them pay their own bills.  If your children have cell phones, what better way to teach money saving than by having them pay their own bills? Of course, if they aren't working or have no other sources of income, you'll have to bear the burden. But you can still show them how much owning a phone actually costs. Sooner or later, they'll understand it's not free.
• Get them a debit card attached to a checking account. With a debit card, your teens can't spend any more than they have in their checking account. A debit card is also easier to obtain than a credit card due to some of the new credit card laws.

College Students

• Create an emergency fund. Regardless of whether your children pay for college through student loans or you foot the bill yourself, an emergency fund is helpful for those unexpected expenses. Perhaps there's a lab fee or a special book that needs to be purchased. This type of account creates a safety net and can be very useful during the college years.
• Discuss trust. Since some college students end up living far away, one of the best tactics parents can take is to have a discussion about trust. Sure, a debit card will help curb spending, but you will not be present 24/7 to see what's happening. Talking about trust issues will impress upon your children that you respect them as adults.

Talking to your kids about money shouldn't be an unpleasant experience. Instead, it should be a learning opportunity to establish good practices at an early age. If you need some assistance on what to say, consult with your accountant or CPA for advice.

Best of luck in September!

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