A number of our clients are in their late fifties or early sixties. In many cases they were motivated to hire a financial planner as they worried about their readiness for retirement. While it’s good they saw a need, there is no doubt that the earlier one begins to focus on their finances, the better.

One 2009 report on credit card debt showed that 19% of college graduates had over $7,000 in credit card debt. The website creditcards.com reports that the average household credit card debt was over $15,500! We believe that educating your children about money is one of the best things you can do for them.

Most children are first introduced to money whey they receive their first allowance. An article in the Journal of Financial Planning by Eileen Gallo, Ph.D, titled “Walking the Walk: A Financial Planner Teaching His Children” (April 2010), discusses how a husband and wife consulting team have been educating their children about money. With their approach, an allowance should be something given to a child, not tied to chores. According to the article: “The purpose of chores is to help children develop a work ethic, and the purpose of an allowance is to help them learn to think, choose and consider alternatives, when it comes to money”.

There are many ways to structure allowances. The couple in the article awards $6 a week to each of their children. Two dollars are for spending, two dollars goes into a bank account and two dollars are for charity. At the end of the year, half of the money saved can be spent on something more significant, teaching the children the concept of saving for a large purchase and providing an opportunity to discuss the concept of priorities. The other half remains in the bank. Each year the bank account gets bigger, so their 50% for spending gets bigger and more meaningful.

The couple found that deciding on a charity was best done on an annual basis rather than weekly. It’s probably wise to avoid letting your interests dictate your children’s charitable ideas.

Other things parents can do include the following: (1) help their children learn about stocks by setting up an account for them to invest a small amount of money. (2) pay their children for doing other projects around the home. (3) spend time showing their children what it costs to run the household and (4) Set an example by living a conservative lifestyle.

As children get older they will need a broader exposure to money matters. Some schools provide classes in basic money management. If your children’s school doesn’t, ask an administrator if they’ve considered the program sponsored by the National Endowment for Financial Education (NEFE). NEFE’s High School Financial Planning Program® (HSFPP) consists of a seven unit student manual, instructor’s guide, and a dynamic suite of Web pages that offer a large, continually growing collection of resources, articles, and financial tools for teachers, students, and parents. NEFE provides the material free of charge. To learn more about the program, visit http://hsfpp.nefe.org .

Some financial advisors help educate their client’s children. As part of our annual investment services, Patterson Advisors provides each client with a 3-4 hour “mini analysis” on a wide variety of topics, which can include basic financial education for a relative, or even a friend, for that matter.

There are a myriad of ways to educate your children about money matters. How you choose to do so isn’t nearly as important as making a decision to help them learn and then following through with it. Not discussing money matters at all can be just as detrimental to a child’s financial future as leading a poor example.