The Buffalo News

Teaching kids the facts of life and money

Parents encourage children to save, but just like adults, some kids find that hard to do

By Emma D. Sapong /
News Staff Reporter NEWS STAFF REPORTER

Updated: January 04, 2010, 8:01 AM / 0 comments

Meet Amiyah Smith: Self-proclaimed spender. The bubbly 6-year-old has a school-based savings account with a local bank and the balance is stalled at $15. Instead of making deposits, she spends the money she gets on sweets. "I do want to save, but I just like candy so much that I can't help it," she admitted.

Now meet Kiara Smith: The saver in the family.

The 9-year-old usually puts her money-be it 25 cents or $5-aside for pricier purchases, like jewelry and electronics. She recently saved enough, over a period of a couple of months, to buy a Nintendo DS game system.

"I keep my money so I can get something big, something I really want," said Kiara.

Both girls own piggy banks and are encouraged by their mother to save and be more conscious of their spending.

"They are total opposites when it comes to money," said Dana Smith, of Buffalo, the girls' mother. "Amiyah wants to spend her money as soon as she gets it, like it's burning a hole in her pocket. I tell her to save it. Kiara is kind of cheap; she won't spend her money on candy and junk. She'll rather save it. We are trying to get Amiyah to do more of that."

Experts say instilling good spending and saving habits in children will better equip them with money management skills for adulthood.

"We all have to make decisions to separate wants from our needs, and it's best that those patterns are ingrained at a young age. That's what it means to become responsible with money," said Anton Simunovic, CEO and founder of www.threejars.com , a paid Web site that teaches comprehensive money management skills with features that allow children to interact, track and experience the impact of their financial decisions, and even make investments. "It's an opportunity for kids to practice living within their means; that more goes in than out," he said. "We would not be in this financial crisis if people practiced that simple truism."

Rooting kids in a sound understanding of money and the important role it plays in our lives will also help them make better financial decisions when they get older, the experts say.

Simunovic said it's especially important since children today are immersed in a consuming culture.

"Corporate marketers are getting to kids at a younger age, so if they don't learn how to manage money, money ends up managing them," he said. "Anything this recession has taught us is money is a life skill. Teach them when they are young, because the dollar amount is low and consequences are low. We know if we want our kids to be good athletes or musicians, it's best to start them at a young age-no different with money."

Parents are taking different approaches to teaching their children about handling money, but with the same goal of raising financially savvy kids. They've shared with them the obligation of monthly bills, holding a job, the reality of taxes and credit cards, and the benefits of investing and accruing interest on savings accounts.

"They know that their dad goes to work so that we can pay for this house," said Amy Metzger, a Wheatfield mother of three. "And they know that later in life, they'll have to get an education and a job so they'll be able to pay for the things they want."

Her 10-year-old, Tim, received a good chunk of money and was eager to open a savings account once he learned about interest.

"Every month you get a little bit of money if you put enough in your bank account," Tim said. "I think it's pretty good that they do that; it's better than nothing."

Simunovic said teaching children about interest is an incentive to save.

"It's a critically important linchpin of money management," he said. "The way to get financially wealthy is to set a little amount aside and to earn interest on that money and have it compounded. Some refer to it as the eighth wonder of the world."

Kiara has grasped the concept of being employed.

"You've got to work for them to pay you; that way you can have money," she said.

She also understands the dire consequences of paying utility bills on time.

"You have to pay it when it tells you to pay it," she said. "When you don't pay your electric bill, you probably won't have lights."

Ten-year-old Jessica Buffamonti already knows the convenience of credit cards.

"If you don't have money, you can you use a credit card and you pay for things later."

Lynn Buffamonti, Jessica's mother, is teaching her daughter about credit cards by setting an example.

"She knows that we use them all the time, and she wants one, but she's too young," said Buffamonti, who also has a 4-year-old son. "I pay off my bills every month, so I don't carry a balance, and she knows that."

Allowance or not?

Metzger doesn't give her children allowances. She doesn't like the idea of paying children to do household chores.

"That's something you should do as part of the family," she said.

But she does infrequently give them money for exceptional efforts with a chore. However, for the most part, her children get and save money from birthdays and holidays. And when they're out shopping and something catches their attention, they know they have to pay for it themselves.

"They need to know they won't be handed everything on a silver platter," she said. "I don't want them growing up spoiled; I want to teach them the value of a dollar."

And it seems to be working. Tim is diligently saving to buy a car when he turns 16 and to pay for college. He has $530 so far in his eight-year CD.

"I would rather save than spend my money, because I want to have a good job after I go to college," he said.

Buffamonti doesn't dole out allowances, either. Her children, especially Jessica, get money by completing tasks and chores.

"The goal is to teach them responsibility and choices," Buffamonti said. "You can't have everything; you have to work hard for everything you get."

She said Jessica is aware of the value of money and will often reconsider a purchase once she knows the hit her budget will suffer.

"She'll say, 'I don't want it; it's too expensive,'" Buffamonti said.

Jessica earns $1 to $5 when she rubs her mom's back, or cleans her room or the kitchen. She has a savings account and a realistic toy ATM, complete with a card and PIN.

"I usually save it for when I grow up, for college or buying a house," she said. "Sometimes I spend my money on other things, like books and toys." But she has savings in the "$400 zone," she said.

Simunovic believes allowances should not be tied to chores, because the focus is more on completing the chore and not being responsible with money.

"Of course, children have to do chores; that's part of being a family, everybody pitches in," said Simunovic, who is the father of six young children. He recommends revoking a privilege, like watching TV or using the computer, if a chore isn't completed. But give an allowance as a way to get kids to make decisions about their money.

Travis Baer's monthly allowance ranges from $25 to $40, most of which he saves, he said.

"I've got to save my money because I'm an uncle, and I have to buy my niece and nephew gifts," the 8- year-old from Buffalo said. He said he bought his 9-year-old nephew a laptop-a real one.

"It was all my money I had saved; I had been saving since January," he said.

Simunovic said parents can teach their children money skills without it being too heavy or serious.

"Money is a tool we use to achieve our dreams, it's neither good or bad, it's not the point of life," he said. "But learning to manage money is a life skill. The key is not to fear it, not to have anxiety, not to covet it. We make money, manage money and it allows us to work toward our dreams."

esapong@buffnews.com