While I was driving her to school recently my 12-year-old daughter says to me, “Mom, I saw this really cool fish tank on TV. You just put the water in and it pushes all the dirty stuff out. We really need to buy this, and then I won’t have to clean the tank so often.” I raise my eyes to the rearview mirror to glimpse a look at my daughter in the back seat. Then I take a deep breath and begin “the talk.” You know the one: you’ve had it many times before. The money talk. Specifically, the “needs versus wants” talk.

We’ve tried to exert more parental control over her exposure to advertisements now than we did when she was younger. However, try as you might to limit those outside influences, we live in an invasive media culture where advertisers have many sneaky ways to reach their targets. And don’t forget the peer influences at school, which make it even more difficult to stem the constant flow of images and suggestions to “buy stuff.”

We know children’s attitudes about money change as they grow older and much of their financial maturity depends on how their parents teach them. But even more important is for us to show them money skills through our own behaviors. The economic recession has us all looking for ways to spend wisely and save more. It’s crucial to teach these concepts to children in age-appropriate ways.

“As they develop, children change in their understanding of what money is, how it is used and where it comes from,” says Katherine Loveland, PhD, professor in the Department of Psychiatry at the University of Texas Health Science Center.
Elementary-aged children may be most receptive to learning financial concepts, Loveland adds. “They particularly enjoy learning these concepts when taught in concrete ways, through actual practice making decisions about spending and saving.”

According to the National Financial Educators Council, “Teens may be more resistant – studies support a relationship between financial education, financial literacy and positive financial outcomes.” And while young children don’t fully understand how money works, they still learn lessons from watching their parents buy groceries, shop online, or deposit money into their savings accounts.

Here are some tips for teaching kids:

Plain Talk Most kids have no concept of how much things really cost. Explain that Mom and Dad, unlike Santa, have limited resources.

Let Kids Help Give kids the opportunity to be part of managing their money. It can be a fun and rewarding experience for them.

Be Clear Remember to differentiate between needs and wants. Understanding the difference is critical, particularly to teens.

Set Budgets Tell your older kids how much you plan to spend on them.

Prioritize Ask them to prioritize their wants based on the budget; then have them research the prices for items on the list.

Negotiate Compromise with an offer to let them earn the money to make up the difference by doing extra chores or contributing money from their savings.

Savings The non-priority items go onto a wish list; suggest to your kids that they set aside some of their future earnings toward buying those items themselves. This helps them associate saving money and making sacrifices with getting things they want.

The decisions kids make as young adolescents will affect their future financial dealings. Time goes by fast; before you know it your teens will be leaving the nest. Are they practicing good personal money management skills? Now is the time to begin by having “the talk” and helping your kids and finances work well together. Help them develop good p•ersonal money management habits now.

Brandy Speer is a National Financial Educators Council’s partner and kids’ personal finance educator. She is the founder of Financial Literacy Action Network, a social enterprise organization dedicated to building strong financial futures for families. Her organization produces personal money management programs for teens and Employee Financial Wellness Programs that positively affect employers’ bottom lines. Visit her at http:// FinancialLiteracyActionNetwork.org