I have a confession to make. I had no money skills growing up whatsoever. My parents lived paycheck to paycheck, and my mother frequently agonized over how to buy groceries for the week. Because of our financial situation, there was rarely money for "extras" - going bowling, vacations, toys, books. Heck, we barely had money for necessities like clothes. When I was fifteen and old enough to work, I became responsible for buying my own clothes. As a teenager (and, don't forget - a girl!), I spent my money on outer clothes: shirts, pants, and the like. Underwear? Heck no! I wasn't going to spend my money on such a frivolous item as underwear.

As an adult now, I realize that not only did I not learn the money management skills I needed, but also that I learned some things I shouldn't have. Things like underwear aren't important. To this day I still have a hard time spending money on underwear and bras (although I recently bought three bras! Yea me! However, I have to admit that I still didn't like spending $40 apiece on them).

My mother shouldn't have shared quite so much with me; I grew up afraid to ask for anything that might involve money. It affected me in several ways, the most significant being that I only applied to two colleges. Since I had to pay the application fees myself (and working at a drugstore didn't give a teenager THAT much disposable income), I had a limited budget. This article isn't supposed to make you feel sorry for me (I'm very happy where I am today - even with old, ratty bras), but to drive home how important it is to teach our children good money management skills.

Two years ago we implemented an allowance system for our girls. Once a week they get the dollar equivalent to 1/2 their age, and that amount is divided as follows: - 20% to the charity of their choice - 40% to savings - 40% to disposable income.

Charity - Every six months, the girls pick a charity, and they decorate a jar with a picture of the particular charity. Each week, the charity money goes Plop! into the jar. So far we've donated to the National Zoo (pandas for six months and fishing cats for another six months), the National Disaster Search Dog Foundation, and Red Cross (for Hurricane Katrina relief). Picking the charity allows them to really think about the particular organization and their needs, and sometimes they'll donate extra money to the charity. And we match the donations as well.

Savings - We tell the girls that savings (essentially their piggy banks) are for long-term, big, important goals. I imagine this to be used for things like a school trip to Europe, down payment on a first car or house, or extra money for college. After six months, we count the money and then take it to the bank to deposit in their very own accounts. Disposable income - This is for the girls to spend as they will. The first time they got allowance they spent it all on toy machines, and I had to almost physically hold my husband back as he tried to stop them. I wanted them to see what happened when they spent all their money, and feel what it was like when it was GONE! They've since graduated from that impulse to spend, spend, spend, and now they very consciously and determinedly save their disposable income for bigger things (like Barbie dolls or the current favorite, Sweet Streets. Yes, I have girls!).

We've found that the girls already have a strong understanding of money, from basic math (how many dimes are in a dollar) to the more complicated concept of interest (we go over their bank statements for their savings accounts together).

I'm happy to know that we're establishing a strong foundation for their money intelligence, and that they'll never shy away from buying underwear.

Copyright 2005 Dawn Goldberg. You are welcome to use this article online in electronic newsletters and e-zines as long as it remains complete and unaltered (including the "about the author" information).

About the author:

Dawn Goldberg is a Certified Virtual Assistant, COO of Assist University, mother, community leader, and former teacher. Her vision is to create a resource that helps parents find ways to enjoy valuable, constructive time with their children every day. Contact her at info@afterschoolsnacks.com or visit www.afterschoolsnacks.com.