How to raise a millionaire

MANY OF US grew up in households where it was taboo to talk about money—or at least considered impolite. But according to Ted Scheinman, center director for the Oregon Council on Economic Education (www.oreconcouncil.org), a nonprofit that trains educators how to teach finances in the classroom, it’s one of the greatest disservices we can do to our children. Today the nation’s roughly 33 million teens spend $176 billion a year on items like clothes and video games. But according to the DC-based Jumpstart Coalition for Financial Literacy, only about 10 percent of high schoolers report learning about managing money in school. Although seven states require high school students to take a personal finance course before graduating, Oregon is not one of them. And thus the task falls to parents. Kari McClellan, co-founder of Financial Beginnings (www.financialbeginnings.org), a Portland nonprofit that teaches financial literacy in area schools, offers these guidelines for teaching kids to appreciate the power of money. —Sally Powers

ELEMENTARY SCHOOL

HAND OVER THE DOUGH

Allow your child to handle and exchange money. In a world of debit cards and online banking, money is an abstract concept to children.

Put her on the family payroll. Start with a $1-a-week allowance. If she wants to buy a toy at the store, explain to her how many of her dollars it will cost.

Involve her in real family discussions about money. Let her see what a bag of groceries costs at the store and then sit down with you as you balance your checkbook afterward.

MIDDLE SCHOOL

BANK ON IT

Open a savings account for your child. It’s time she understands banking in the real world. Bring her to the bank and encourage her to ask the banker questions like, “What’s a percentage rate?”

Teach bargain shopping. Give her a total sum, such as $25 a week, for her grooming products and entertainment, so she can begin to buy wisely.

Don’t criticize her for mistakes, or she may fear making decisions. For example, if she chooses a lower-priced shirt of poor quality, and the shirt fades after one wash, you’ll have the opportunity to speak to her about value. And if she overspends, work out a loan that she can take out from you.

HIGH SCHOOL

ESTABLISH CREDIT

Allow your 15-year-old to handle most of her own expenses (beyond food, shelter and essential clothing), based on a monthly number you work out.

Encourage her to get a part-time job. Paychecks provide the opportunity to explain to her taxes and long-term savings, and she’ll have a stake in her own budgeting.

Get her plastic. Scary? Sure, but on average, universities lose more students to credit card debt than academic failure. And even upon graduating, the average student has racked up $2,000 in credit card debt. Giving her a card early provides you with the opportunity to teach her how to use it responsibly.

Teach her how to read a credit card contract. McClellan points out that college students are one of the most likely groups to be victims of predatory lending, such as those offered by payday lenders and credit card companies. Explain to her how interest rates work and the importance of making more than the minimum payment.