Blackstocks.com: In the Know

Getting Kids Interested in Interest … and Investing!

The time will come when the kids in your life will be old enough to earn their first income - whether it be from a lemonade stand, paper route or summer job.

The first two articles of our "kids and money" series examined ways to help children become wise savers and spenders. This final article looks at introducing kids to the idea that money saved and invested - in a bank or in the stock market - can earn more money, to supplement their income. Hopefully, this will help them avoid the fate of poet e e cummings when they grow up!

Sparking Interest in Interest

There's a scene in the movie Mary Poppins where young Michael Banks refuses to give up his tuppence to the bank manager, provoking general chaos and a run on the bank. Obviously, the world's greatest nanny hadn't done a very good job of explaining interest to her charge.

Teaching Kids Smart Spending and Saving Habits

Giving children a regular allowance to manage is only the first step in teaching them financial planning skills. They also need real experience in spending and saving, and guidance from patient adults.

In a recent survey, high school and college kids said they rely overwhelmingly on their parents and/or other adult relatives for financial information.

So, adults of America, wake up! The country's financial future is at stake. This week's installment of 401(k)ids examines spending and saving exercises you can do with the kids in your life to keep them fiscally fit.

Learning to Spend - Let Your Child Make Mistakes

Learning to spend wisely involves a certain amount of trial and error. If you give your child an allowance but insist on approving all purchases, or if you give your child an advance every time she overspends, the financial planning lesson will be diluted.

So, lesson one for parents is "hand over the money and try to keep your mouth shut." (Of course, that doesn't apply if you have banned certain categories of toys from your house for reasons of principle.)

Black Parents Help Sons To Keep Eyes On The Prize

There is a huge achievement gap between black students and white students across the United States.  Black students consistently lag behind their white classmates on standardized tests.

According to a Washington Post article,Black Parents Seek to Raise Ambition, in affluent Loudoun County, known for its strong schools, black students consistently lag behind their white classmates on standardized tests. Last year, 63 percent of black eighth-graders in the county passed the state math test; 62 percent passed in English. White students' pass rate for both subjects was 89 percent. At Eagle Ridge Middle School, where 8 percent of students are black, the gaps were similar.

About Black 15 familes, including the parents of nearly every 6th grade black male of Eagle Ridge Middle School in Loudon county have taken their sons' academic futures into their own hands by forming a club.  The mission of the club is to push their sons to graduate from high school on time without lowering their expectations or test scores along the way. They call it Club 2012.

The group holds monthly house meetings, twice-weekly homework sessions, "rap sessions" between fathers and sons, and social or community service activities. The parents speak often with teachers and administrators, many of whom come to parent-organized events.

Learning About Finances - Give Your Child an Allowance

Most financial experts agree that children should be given an allowance in order to learn financial skills at an early age.

Janet Bodnar, deputy editor at Kiplinger's Personal Finance, defines an allowance as a fixed amount of money that children get at regular intervals in exchange for certain financial responsibilities that they take on.

"Giving your kids an allowance is the best money management tool you can use with your children," Bodnar says.

Have you ever noticed that children will spend unlimited amounts of money as long as it's yours?

"When it's their money on the line, children make more informed purchasing decisions," Bodnar says.

The problem is that most parents resist giving children an allowance and, if they do, they usually give the children too little. If the allowance isn't large enough for children to experiment with -- to make mistakes with -- it won't have the learning effect you'd like it to have.

How young is too young?
As soon as your child begins to express a sincere interest in material wants (as in, "I want that!"), it's time for an allowance. Depending upon the child, that's probably around the ages of 3 to 5.