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How to Teach Your Kids About Money

Should I use money to reward or punish my children?

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Janet Bodnar
Kiplinger's Personal Finance Magazine
www.kiplinger.com  

Janet Bodnar is deputy editor of Kiplinger's Personal Finance magazine, for which she has written articles on a wide range of topics, including investing, money management and the economy.

Bodnar is a nationally recognized expert in the field of children's and family finances. Her latest book is Money Smart Women: Everything You Need to Know to Achieve a Lifetime of Financial Security (Kaplan). She speaks frequently on the subject of women and money.

Bodnar's "Money-Smart Kids" column appears regularly in Kiplinger's magazine and at <a>www.kiplinger.com/columns/kids</a>. It was chosen by Moneysmartz.com as one of the top financial columns online. Bodnar is also the kids and money coach on the AOL Coaches site.

Her book Raising Money Smart Kids (Kaplan Publishing) was a finalist in the personal finance category of the Books for a Better Life awards, honoring the best self-improvement books of 2005. It was also a selection of the Washington Post's Color of Money book club.

Bodnar has appeared on Oprah, Today, Good Morning America, The Early Show on CBS, Fox, CNN and PBS. She has done hundreds of radio and TV interviews and appears regularly on WUSA, the CBS-TV affiliate in Washington, D.C., and WTOP, the major all-news radio station in Washington. She is a popular speaker and has been quoted in publications ranging from The Wall Street Journal and Institutional Investor to Parents and Glamour.

Bodnar has been recognized by American University for excellence in personal finance reporting, and by the National Council on Family Relations for her televised reports on children and money. The audio version of her book (read by the author) received three "best of" awards, from Publishers Weekly (business category), Library Journal (nonfiction) and the Audio Publishers Association (educational category).

Prior to joining Kiplinger's, Bodnar worked for The Providence Journal and The Washington Post. She received her master's degree in journalism from Columbia University, where she was also a Knight-Bagehot Fellow in Business and Economics Journalism.

Married, she is the mother of three children.

Should I use money to reward or punish my children?

In this video, Deputy Editor of Kiplinger's Personal Finance and author Janet Bodnar answers questions on the many issues surrounding what kids should know about money.

This series: 35,389 views

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Host: Should I use money to reward or punish my children?

Janet Bodnar: I really do not think that you should use money as a way of rewarding or punishing your children. Those two things should be separate. Money is a way of teaching financial responsibility and so money should be linked to financial responsibilities.

Rewards and punishments for other things are totally different and those rewards and punishments should be suitable to the offence or suitable to the good thing that your kids do. So, for example, if the kids are fighting over watching TV or who is going to play the video game system now or whose turn is it, you do not dock them their allowance. What you do is you turn off the TV and say, "Nobody is going to do this until you guys work out a system or a schedule about who is going to do it now.

" So, that is a punishment that's more appropriate to that particular offence than simply docking their allowance which has nothing to do with whether or not they are watching the TV or whether they are playing the new V-system. So, the point is it really has to be appropriate to what their behavior is and that is also true as for as for example, grades. A lot of parents are tempted to reward their kids with money if they get good grades but oh, there are just so many problems with that.

I think that getting good grade should a subject of internal satisfaction for the kids. Also, you lose your leverage as the kids get older, they keep wanting to 'Up the ante' and then when they can earn money on their own you lose some of your leverage you just -- it's a slippery slope that is very, very complicated. Again, learning is influenced by lots of things other than money.

Money is probably the last thing that influences your kids to learn. It depends on their native intelligence, their family situation, what kind of learner are they and also you might again, instead of rewarding just good grades you might want to reward good effort too. Maybe your kid is just going to be a C student but he really tries hard so you want to reward good effort and the best reward is just share of parental pride, a big hug, a hi-five. "You did great, we are really proud of you.

" Maybe a spontaneous reward like taking the kids out to dinner or a real big blowout Sunday or something like that, but anything is better than paying them off to do things that are good or paying them not to do things that are bad.

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