CONSUMERS : Holiday Checks Can Teach Gift of Thrift
When those holiday checks for the children and teen-agers start arriving from far-away grandmas and uncles, will your youngsters know how to manage the gifts of money and save them?
It depends whether you’ve taught them the benefits of stashing cash and how the banking system works, or if your youngsters have been lucky enough to get some practical money management lessons in school or through local saving institutions.
Although experts agree it’s best to start kids early in learning about money matters, savings sense hasn’t been a big part of U.S. parenting practices.
A 1987 survey, for example, found that 35% of American parents had discussed money management with their children, although other studies show that the 27 million 12- to 19-year-olds in the U.S. spent $30 billion of their own and $41 billion of their parents’ cash in 1989.
Youngsters, in fact, have so much money to spend they now have their own marketing nickname--they’re “Skippies,” school kids with income and purchasing power.
But if you’ve been skipping out on giving your children the education they need in money matters, what’s to be done?
“All children should be given an allowance if possible, because they are going to be handling money in our culture all the time,” recommends Dr. Joyce Brothers, a psychologist and behavior columnist. “It doesn’t matter how much money they get . . . but how the parents handle it. The children should learn how to budget that money and how to save for something.. . . They learn responsibility that way.”
Sylvia Porter, a syndicated financial columnist, urges parents to start youngsters with allowances and savings programs “the earlier the better, as soon as they have something to bank, even if they’re starting with an allowance of 25 cents a week.”
Schools, educators concede, offer only sporadic money management lessons; most banks, savings and loans and credit unions, because of legal restrictions on accounts, usually don’t seek out youthful customers, although some offer special programs to help the young learn about money.
In the Los Angeles Unified School District, for example, many kids learn about banking through Adopt-a-School programs, which match community businesses and specific schools. In La Habra, the Security Pacific branch offers a program at La Positas Elementary on banking basics, passing out signature cards for savings accounts and taking deposits on campus. Security Pacific offers other similar programs elsewhere on a branch-by-branch basis.
The Los Angeles Teachers Credit Union recently issued play money to teachers to show youngsters how to make change and it’s working on a prototype checkbook to teach kids how to manage a checking account.
Many financial institutions, including Wells Fargo, sponsor Junior Achievement programs to help teen-agers learn about money by teaching them to manage their own businesses.
The Federal Reserve, meantime, issues free videos and comic books on basic banking matters for kids; First Interstate Bank has given all California high schools a computer program on banking basics.
Many institutions, however, feel restrained by the law in seeking young people’s money. Most offer savings accounts for kids, some with no fees and minimal opening balances (anywhere from 10 cents to $100). But accounts for minors--those under age 18--must, under California law, be co-signed by a parent or guardian, experts emphasize.
“The state law that says minors can’t sign legal documents without a parent or guardian really does place a roadblock in the way of things like checking accounts,” says a First Interstate spokesman. “We’ve never had much demand for those.”
But in Denver, the 3-year-old Young Americans Bank, the nation’s first full-service institution targeted at people under age 22, already boasts 10,500 young customers from 37 states and seven foreign countries and assets of about $7 million. Children age 18 or younger must have parents or guardians sign for them to open accounts at the Denver bank, where customers age 12 or older can have checking accounts and can be issued automatic teller cards; the bank’s youngest loan customer is age 11.
(F.A.O. Schwarz, the noted New York toy retailer, also started this year what it calls the “First Children’s Bank,” where affluent youngsters can open savings and checking accounts for a minimum of $50, though they must maintain a $500 minimum balance to avoid charges.)
“A lot of banks are asking us for information,” says Cynthia Ann Culkin, Young Americans’ vice president. “Banks are seeing that financial services for young people are a viable idea. Nationally, they’re starting to focus on that now. There are a few programs through schools and that’s a start. People have to realize that these young people are the banking customers of the future.”
If you want to get started now with helping your little Georgie or Janet be smart about that $50 holiday gift, experts suggest that you consider having them spend, say, $25 of it on a special present for themselves. Then, take them to a financial institution and show them how to start a savings account with the remaining $25.
If they don’t receive one now, consider giving your youngsters a weekly allowance, encouraging them to save some of that sum. (Experts say kids can start learning about money as young as age 5.) Ask at your child’s school about what money management programs are offered; if such classes are electives, you might suggest your kids take them.
And if you really want your child to understand where the family money goes, Brothers suggests that working parents, at least once, might carefully convert their paychecks into cash, stacking the money into separate piles on the kitchen table to show youngsters precisely what gets spent for essentials--the rent or mortgage, food, lights, heat, telephone--and what’s left over.
Such a graphic exercise will allow youngsters to “actually see how much goes out for fixed expenses, and what small amount is left over,” Brothers says.
