I was recently interviewed by a reporter who wanted to know when children should get various money privileges and responsibilities -- such as starting an allowance, opening a bank savings account and budgeting for expenses.

That got me thinking that readers of this column would appreciate such a list, too. I've expanded it to include a timeline of financial milestones for kids, from preschool to college.

Preschool. Start with the big picture, by showing children that money can be exchanged for other things. Let them put coins in a vending machine or use their birthday money to buy something at the dollar store. They can play with fun savings banks, learn the difference between a penny, a nickel and a dime, or collect state quarters. Keep it simple, and don't expect too much.

Ages 6-7. Set up an allowance. Kids are learning about money in school and becoming more sophisticated. They understand that four quarters equal $1, and they have some sense of how much $1 will (or won't) buy. Making choices about how they spend their own money is a great hands-on learning tool. Think of it as stealth budgeting.

Ages 8-9. Open a bank savings account. Of course, you can start saving for your kids when they're much younger, but they have to be a bit more mature to appreciate how a bank works. It takes them a while to understand (and accept) that if they deposit, say, a $10 bill, they'll get their money back -- but not the same $10 bill.

Ages 11-12. Expand the allowance to include additional responsibilities, such as paying for mall excursions with their friends and buying gifts. This is also a good time to introduce kids to the basics of investing -- namely, owning shares of stock means being part owner of a company whose products they use or whose stores they shop in.

Ages 14-15. Encourage kids to get a job, at least over the summer. Teens this age are permitted to work in offices, amusement parks, movie theaters, restaurants, supermarkets and other retail stores. Arrange for them to have an ATM card, so they can deposit and withdraw their earnings from their own savings account.

Ages 16-17. Put teens in charge of a clothing allowance. If they don't already have a part-time or summer job, now's the time to get one. Now's also the time to open a checking account and get a debit card, so they can learn how to manage their money before they head off to college (co-sign the account if the bank requires it because they're not yet 18).

Age 21. Young adults are ready to apply for a credit card, after they've had experience managing their money at college or on their own.

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POSTED BY: Nomen (February 13, 2008 09:57 AM)
I introduced my children to a budget and saving right from the start. Impulse buying was also discouraged. They were taught to save a little each week for something they really wanted. When they had saved enough and if they still wanted that toy, they were allowed to buy it. When my sons reached their teen years, I stressed quality and value by letting them shop with me and help decide things like which car tires to buy...Learning these principals helped them to pick the best values when they went on to college and kept their college loans to a minimum.

POSTED BY: Tim Wilding (February 13, 2008 05:07 PM)
I have to disagree with the last piece of advice about getting a credit card. Why get a credit card when you have a debit card? With 80% of people not paying off their credit cards every month, why play with fire? Also she did not mention about teaching your children about making a monthly budget...

POSTED BY: Trevor (February 15, 2008 09:48 AM)
Once your child has an earned income from babysitting, yard work, part time job etc... Help them open a Roth IRA. A 14 year old with a one time $2000 investment will be will have $234,000 by the time they retire at 65 (assuming an average 10% return each year). Convince them to use 1/2 of their earned income by matching what they invest!

POSTED BY: John Lanza (February 17, 2008 09:45 PM)
...We've already started my daughter on a beginner's allowance at age four and she's in the process of saving for her second long-term item (a scooter this time). Just as with reading and writing, teaching them early is key. I'm glad Janet now advocates teaching kids younger.

POSTED BY: miamires (February 21, 2008 07:33 PM)
Getting a credit card aids in building credit; a debit card doesn't. I believe that's why the author is advocating opening a credit card account. However a close hybrid between the credit and debit card, is a secured credit card. Do some further reserach on it. Hope this helps.

POSTED BY: Elizabeth (April 22, 2008 11:31 PM)
...The likelihood of an 18 year old passing up a chance for a credit card just because mom and dad said no is pretty slim. I think it's important for parents to teach their teens the consequences of abusing credit and to make their kids realize that if they do abuse credit privileges, their parents can't automatically bail them out. Give children a good financial education before they become adults, be there to offer advice once they are 18, and be satisfied knowing you did what you could.

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