Managing money is a skill that can occasionally be overlooked by parents while kids are growing up. Children as young as five years old should begin learning the fundamentals of money.

The sooner, the better
Give kids small doses of information by showing them what money looks like, where it comes from and how it is earned. Explain to them the difference between needs and wants, and eventually a piggy bank can be a good hands-on tool to learn how to save. Help your child think of a small item they can save for, and over time show them how they are working toward it.

Allowance helps teach responsibility
Paying your child an allowance is seen often as the most effective tool to teach kids about money. Let your children learn by doing, giving them the power to spend their own money. With that power comes responsibility so they must prioritize and monitor their spending. Once they reach the age of nine or ten introduce your child to the concept of banks and down the road, set them up with a checking and eventually a savings account. Instill the practice of saving by showing your children how compounding interest in a savings account can work to their advantage.

Teenagers will most likely have the urge to spend money like it’s going out of style. Giving them a budget to adhere to can promote frugality. For instance, give them a clothing budget so they learn they can make their buck go further by not buying designer jeans. A part-time job may help them work toward the things they want to buy. Also, give them an overview of taxes by going over their paycheck with them and explaining deductions.

What they don’t teach you in school
Though some students may learn basic personal finance in school, many are clueless on money matters they will face after graduation. Upon starting college, many students will be faced with credit card offers, seemingly free money to them. Make sure your kids are educated about credit card interest rates, which may equal high debt and a bad credit score. Young adults may also be faced with debt from student loans and should set up a reasonable payment plan post-graduation. Speak to them about what a 401(K) plan is and how effective investment vehicles can be. Finally, don’t forget to reinforce the need for insurance including: health, automobile, home, or renters. Many young adults today are going without insurance, which can be risky as bills for car repair or for emergency room visits can be in the thousands of dollars without coverage.

Conversations about money across generations are not happening as often as they should. According to the recent Ameriprise Financial Money Across Generations ® study, only four in 10 (39 percent) of baby boomers say they talk with their families about money and finances on a regular basis.

A financial advisor can help jumpstart the financial conversation and help determine your financial needs based on your own goals and unique family situation. Consult your financial advisor for more information about family financial planning including: saving, budgeting, college saving, retirement planning and more.

This communication is published in the United States and this advisor is licensed only in the states of MI, OH, MD, FL, NC, CA and VA. This column is provided for informational purposes only. The information is intended to be generic in nature and should not be applied or relied upon in any particular situation without the advice of your tax, legal and/or your financial advisor. Neither Ameriprise Financial nor its advisors or representatives provide tax or legal advice. The views expressed may not be suitable for every situation. Consult with qualified tax and legal advisors concerning your own situation.

Neither Ameriprise Financial nor its representatives or affiliates provide tax or legal advice. Consult with your tax advisor or attorney regarding specific issues.

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