Piedmont Street Management: Registered Investment Adviser
85 Piedmont Street
San Francisco, CA 94117
(415) 731-2944
JimEyres@pstmgt.com
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Six Skills Kids Need to Know

Even though classrooms are the perfect setting for role-playing, parents have an edge when it comes to teaching their children real-life money management skills and focusing on their own family's values - whether that means investing in the stock market or giving to charity. Parents should take the lead in helping kids learn the six money management skills I think every child needs to know before leaving home:

  1. How to manage a cash allowance.
    No school lecture and no computer program will teach kids how to set priorities and make spending decisions better than by having them get along on 10 bucks a week.

  2. How to manage a checking account (and an ATM or debit card).
    Every teenage should have an account and know how to balance it - preferably as soon as he or she gets a part-time job. (Co-sign or open a custodial account if your child is under 18 and the bank requires an adult signature.)

  3. How to save for a goal.
    Nobody can be thrifty just because it's the virtuous thing to do. Kids need a reason not to spend, whether it's saving up to buy an action figure or a car. Consider matching all or part of what they put aside.

  4. How to figure the time value of money.
    That's a fancy way of saying that small amounts saved when you're young will eventually grow into big piles of money. To show kids how rich they can be, let them plug numbers into a compounding calculator.

  5. How to get out of debt (or not).
    Instead of delivering a lecture, use this eye-opening example to illustrate the pitfalls of credit: Say you put $50 per month toward a $2,000 balance on a credit card that charges 18 percent interest. It will take you 62 months to pay off the balance - and cost you $1,077 in interest.

  6. How to compare prices.
    Start with unit pricing at the grocery store and build up to Abercrombie versus Old Navy (which will help kids parcel out their clothing allowance.)

To teach kids how much their savings can be worth in the future, log on to usaa.com and enter keywords "Savings Calculator."

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