Focusing on Finance: La Jolla seminar offers tips for talking to kids about money

By Ashley Mackin

At what point should parents talk to their children about money? How do mom and dad bring up financial planning without scaring them? Why do children learn about “the birds and the bees” before they learn how to balance a budget? How has college student loan debt built to more than $1 trillion nationally?

Financial planner Hillel Katzeff and teacher and single mother Glenda Sacks held the informational seminar “Facts of Life: Teaching children about dollars and sense” on Feb. 26 to answer these questions. They proposed introducing children to the concepts of value and choice as a precursor to financial matters. The seminar was held at Katzeff’s La Jolla Village/ UTC office, where he said he hopes to hold more workshops in the future.

Having raised two financally savvy children (now adults), Sacks suggested introducing the subject of money to kids in a lighthearted way when they are young, so when they’re older, it’s not a scary, overwhelming concept. “We don’t want to burden our children with financial problems, so it’s a delicate balance between teaching them how to survive in life and teaching them only what they need to know at various ages,” she said.

One path is to instill an understanding of “value” at the preschool age.

“After a birthday or holiday, have your child choose one gift they received and give it to someone less fortunate,” Sacks said, adding that when it came to sugary cereal, she allowed her children to have their favorite just one day a week, so that day and that experience were appreciated.

To further teach about “value,” Sacks said she established a point system, so when her kids were good, they would get points, which they could accrue and trade in for things they wanted. Case in point, her youngest daughter wanted a stuffed tiger that cost $4, so she worked to earn enough points, and Sacks said when she received the item it meant that much more to her because she earned it.

As they grow older, children can learn about choices, another critical element of economic success. While growing up in South Africa, Katzeff said he was told the definition of economics was “a study of how we choose to apply our scarce means to satisfy our unlimited wants.”

“Choice is the key element here,” he said. “It’s one of the things Glenda recognized as a way to engage kids — give them choices.”

Sacks said when her children were young, they played the “billboard game” to learn about the concept of choices. When driving in the car, she would point out billboards and ask her kids whether the product or services advertised could be classified as a want or a need.

Another technique she used was while at the grocery store and on family vacations, she allowed her children to each buy three things, telling them how much they could spend. It was up to them to decide which things were most important at the time.

When it came to amusement parks or vacations, Sacks said, “Agree before you leave home about how much money they can spend per day and allow them to carry the money. Tell them when it’s gone, it’s gone, and hold to that.”

Katzeff said by giving young, impressionable children these tools, by the time they’re teens, they will better understand finance. “As students enter college, they will have already had the conversations about money and values, and they’ll understand that they can talk to their parents about money without it being this scary, unfamiliar subject,” he said.

Throughout the hour-long presentation, Sacks and Hillel answered questions and told stories to illustrate their points, providing ideas for implementing each strategy. They also explained money- saving options for college and ways to incentivize teens to save money.

The seminar ended with resources for parents (see sidebar below).

Financial Resources for Parents

■ Jump Start Coalition: Financial education organizations that work to prepare youths for lifelong financial success (

JumpStart.org

)

■ Kids and Money: Free, downloadable document from the Financial Planning Association (

FPAnet.org

)

■ Money Smarts 4 Kids: Financial literature for children (

MoneySmarts4Kids.com

)