By Stephen Fournier, President, Central New York Market, KeyBank
Whether it’s putting a quarter in the piggy banking, buying an ice cream cone from the ice cream truck or getting to spend birthday money, children begin forming a relationship with money at a much earlier age than most people realize. Many times, this relationship is defined by unrealistic expectations—money is easy to come by—and unsustainable behaviors—if I want it, I can buy it—that become real obstacles when kids transition toward adulthood.
For years, there’s been a push to expose children to more financial education. However, recent studies show that when it comes to shaping financially responsible children, it’s not instruction that is needed. It’s experience. Children need to understand how to earn money, why saving money is important and the benefits of making smart financial decisions. Fortunately, this training is easy to start at home.
The ability to earn
The most important lesson parents can teach their children is that money is earned. Allowance for household chores is a great place to start. Create a list and hold your child accountable for doing their job.
The value of savings
Equally important to the lesson that money is earned is to create the understanding that earned money is power. And as superheroes like to say, with power comes responsibility. Set ground rules about how your child manages their earned money. The American Bankers Education Foundation suggests using the following formula.

• 30 percent for fun spending (movies, toys, pizza, make up, etc.).
• 30 percent for short-term savings for bigger ticket items (cell phone, gaming system, tablet, etc.).
• 30 percent for long-term savings, such as college tuition.
• 10 percent for charity

Children do not have to be taught about the instant gratification of fun spending, but short- and long-term savings, as well as charity, are more difficult lessons to teach.
The power of execution
Studies have found that the problem with long-term planning is that people don’t see the benefit. They think of their future selves as a stranger. To reinforce the importance of staying the course, provide financial incentives for kids when they execute their plan. For example, when they save $500, provide them with a bonus. If they save to buy a new gaming system, contribute a free game. It will make it much easier to for them to understand that setting financial goals and achieving them has rewards.
Here are some other tips:

• Explain where money comes from. Adults don’t literally “make” money. You have a skill that earns you money.
  Help your kids understand that purchases you make on your debit card or with a check is money that you have already earned and put into your “piggy bank.”
• Establish the difference between needs versus wants.
• Make your child responsible for small purchases.
• Ensure that your child understands the value of money by teaching her or him how to identify bills and coins and count money.
• Prioritize. Children usually have a long list of wants. Help them determine what they really want by reviewing the pros and cons of purchases. Then make them save for it.
• Introduce the concept of interest to reinforce savings behavior.

The important thing to remember is that young kids are just beginning their relationship with money. It’s confusing. It’s even confusing for many adults. So be patient. Don’t get angry that your child wants everything they see on television, and don’t look at it as a failure of your parenting skills. Instead, accept it for what it is—a byproduct of the times we live in, as well as an opportunity to discuss the value of money with your child.

The transition from high school to college
For many students, college marks the beginning of financial responsibility. For the first time, they are responsible for balancing a checkbook, managing credit decisions and sticking to a budget.

Here are some money management basics that can help ease the transition.

• Create a spending plan. Budgeting is at the core of financial responsibility, and it is an exercise that most financially independent individuals have mastered.
• Stay organized and balanced. Students should be encouraged to create an easy to use filing system to track all of their expenses, transactions, insurance information and bank and credit card statements.
• Understand student loan obligations. Loans can include origination fees, guaranty fees, reduced interest rates for on-time payments and reduced interest rates for direct debit of payment. Students should also be aware of deferral options and the option of making payments on interest during the course of their education.
• Make responsible credit decisions. Not all credit card offers are the same. Students should compare fees (e.g., annual fees, transaction fees, late fees and over-limit fees.) and understand how the card provider calculates interest.
• Protect their identity.

The foundation for financial independence—the lessons parents impart on their children—is laid well before a student ever steps foot on campus. However, it is on campus where these principles are put to the test and where today’s students must do better. With a little awareness and education, and a lifetime of strong adult example, they can.

About the author: Stephen Fournier is president of KeyBank’s Central New York Market. He may be reached at either 315-470-5096 or [email protected].

Tips for handling financial stress
Life happens, and sometimes we can’t help but find ourselves in a financial bind. When this happens, It’s difficult for people to move past their finances. However, money concerns often lead to health concerns, mainly stress-related disorders. For this reason, the American Academy of Pediatrics has provided the following list of tips to help parents and their children cope with tough economic times.

1. Take care of yourself.
2. Limit television and media time.
3. Choose your words carefully.
4. Be sensitive to each child’s needs.
5. Let your pediatrician know if you think your children are showing signs of stress.
6. Plan family meetings.

When adults are anxious, kids are anxious. During economic turmoil, there’s a lot of anxiety.

The best way to deal with this anxiety is to talk about it, says the AAP, noting that “Children can become anxious or upset if no one communicates with them. All they need is a very basic explanation of why people are upset or worried and what impact it will have on them personally.”

The AAP also suggests choosing your words carefully. Focus on reassuring your kids that things are okay and point out positives in your situation, such as Mom and Dad are both employed or that the house is not in jeopardy.

In addition, there are many resources that can help families through financial hardship. In fact, the American Psychological Association states that many psychologists — including family therapists — have experience helping clients with money matters. Also some certified financial planners provide financial education. For more information visit http://www.apa.org/helpcenter/money-family.aspx.