This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

How to Teach Your Kids About Money This Summer

NEW YORK ( TheStreet) -- Most U.S. public school students will be done with classes in the next 30 to 60 days, but that light at the end of the tunnel can mean an oncoming train for parents. They can expect a deluge of requests from their kids for money this summer.

"School will soon be out and bored kids everywhere will bugging their parents to buy them stuff," says Pamela Yellen, a consumer finance expert and best-selling New York Times author. "We know we need to teach our kids to be financially independent, but the question is how?"


Yellen says the earlier children grasp financial issues and strategies, right down to exchanging goods and services for cash, the better.

The best advice to getting those points across to children? Unplug that "cash machine" by teaching kids some time-honored traditions that can help them save rather than spend money this summer.

Here are some tips for them:

  • Wrap allowances around work and chores. Children as young as 4 can benefit from learning that money comes as a reward for work, Yellen says. "The amount the child receives for chores should be based on their age and what you expect them to use money for," she says.
  • Stick to the "40/30/20/10 Savings Rule." Yellen says that when paying out that allowance, tell kids that 40% of their earnings can be used for spending, 30% should be set aside for short-term savings, 20% for long-term savings and 10% for donating. "If children sort their money into these categories every week, they will develop responsible lifelong money-management skills at an early age," she says.
  • Explain "Wants" vs. "Needs." "If you tell your children one thing, but do another, they will catch on very quickly," Yeller explains. "Explain how there are things you'd like to buy that you decided to forgo and why." She also advises holding regular "family night" discussions to share family budget and show kids where the money is going.

Yellen adds that there's good value in pointing out to your kids that the best things in life don't have a big price-tag attached. That could mean a hike in the woods, a swim at the lake or a pickup baseball game in the park. Those are the real summer memories that last.


"As parents, one of our most important lessons for our children is to teach them the lifetime value of being financially responsible and self-sufficient," Yellen says. "Nothing builds a child's self-esteem faster than self-reliance."

That's good advice for kids anytime of year.

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,804.71 -238.19 -1.40%
S&P 500 1,946.16 -26.13 -1.32%
NASDAQ 4,422.0850 -71.3050 -1.59%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs