Ask your kids: If I gave you $20, what would you buy?

Their answers may surprise you so leave this question open-ended. Based on age, personality and interests your child might choose anything ranging from a Monster High doll to iPhone apps or a movie ticket and popcorn.
Have them come up with a few answers, and then explore further to see how they determine value:

• Why did they choose those purchases?
• Do they think it will make them happier/smarter/healthier/cooler?
• Is it something they need or want?
• How long will the emotional value of the purchase last? How about the physical item or experience?
• Would they make the same purchase if they found the money? What if they earned the money at a part-time job or doing chores?

Brainstorm other ways to spend $20 together

How much does $20 buy…

• at Subway or McDonalds?
• in tickets to the movies?
• in bananas or ice cream at the grocery store?
• when donated to the local food bank?
• at the iTunes store?
• in party balloons?

Listen to your kids and you’ll learn a lot about how they place value on different things. Discussing the value of money will give them some valuable perspective next time they make a purchase. On AgentPiggy, you can begin teaching your kids about the value of money by helping them choose items to add to their Marketplace.

Help them get started by asking them to choose 3 things they’d like to spend their allowance on. Explain how much each one costs and how long they’ll need to save up in order to make a purchase. When they are ready to make a purchase, all they’ll need to do is hit “Buy” and you’ll receive a notification. Don’t have an AgentPiggy account yet? You can sign up for free while we are still in Beta.

Part of the reason we started AgentPiggy is because we feel as though there has been a lack of financial education in the school system. Today, while economics is a requirement for most students, only 4 states require a semester of personal finance education according to Jump Start Coalition. Our students are graduating without the know-how to manage their financial responsibility. Capital One says nearly half of all high school graduates are leaving school “unsure or unprepared to manage their own banking and personal finances”.

Given that our recent college graduates are leaving school in serious debt, with both students loans and a slew of credit cards, it is more crucial than ever that we begin addressing financial education. While we do feel as though this should be taught in the home, we also think it should be part of the education system. That is why we are working on both fronts to help guide both schools and parents through teaching their children to be prepared.

Right now in Santiago, Chile we’ve launched a pilot program in a public school classroom mixing math with financial education while utilizing the school’s computer lab for the first time. We have also partnered with 2 other Startup Chile companies, Zuggi and Schoooools, to offer a package of complementary tools for kids in the classroom. The teachers were very receptive giving us great feedback and the kids said they loved it. They were excited to utilize our tools, mixing both math and chores, in order to keep their children engaged in an enjoyable competition. We’re excited to have the opportunity to work on something we strongly believe in and look forward to sharing it in other schools soon.

Last week we discussed saving which is a crucial part of your child’s financial education. This week we are going to talk about teaching your children about sharing. Giving to charity is a rewarding experience and one that is important to begin bestowing upon them at a young age.

Hundreds of thousands of charities exist around the world where you can donate part of your annual income to help those less fortunate. These charities help communities, children, find cures for illnesses, protect animals, the environment and a whole bunch of other great things. Through donating even a small part of their allowance, our kids learn to better appreciate what they have. So, how do you begin to instill the act of sharing with your child?

As we’ve mentioned previously, being a role model and leading by example is one of the best teaching mechanisms. Telling your child why it’s important to share and what it means to you can help them develop empathy towards others. Make giving a family affair by volunteering and giving monetary contributions together.

The holidays are really good times to discuss the act of giving. Many of us open our hearts and wallets to charitable organizations around the holiday season as we reflect on the past year. These are great times to remind your children about donating. While giving money is typically what people think about when you mention “giving to charity”, donating goods is another great option. As your children age, they outgrow both clothes and toys. Helping your kids give a bag of clothes and toys serves multiple purposes for your household.

Of course, it’s smart to also show your child how rewarding it can be to set aside a small portion of their allowance or money they’ve received as gifts for charity. Where do your child’s interest lie? Do they like playing in the neighborhood park? Show them how they can help contribute to building a playground through non-profits like Kaboom. It’s important to identify areas they care about and guide them towards charities that fall within them.

There is no magical number your child should give. Some children set aside $1 per month while others set aside half of their allowance. However modest their donation is, it’s important to show and tell your child what they’ve done. In the future, they’ll be able to claim a tax deduction, but for now, they’ll get the satisfaction of helping others. Find the park that was built through Kaboom and tell them how they contributed to it. Show them pictures of a family in need who you helped by donating toys and clothes. And as always, tell them you are proud of them.

We’ve talked about numerous ways you can begin teaching your children to give. What are some of your favorite ways?

“TTYL about wat ur going to do with ur bday money from gma and gpa. LTS. 2nite at dinner?”

Sending text messages like this might be an effective way to teach kids to be financially responsible, explains financial educator Susan Beacham on her blog. Beacham includes a long list of text messages that parents can send, as well as a glossary of abbreviations which might be unfamiliar to people over age 13

(By the way, the message translates to: “Talk to you later about what you’re going to do with your birthday money from grandma and grandpa. Let’s talk soon. Tonight at dinner?” But that wouldn’t fit in a single text message!)

During her career in finance, Beacham realized that few people outside the industry truly understood how to effectively manage their money. To address this issue, Beacham designed a financial education curriculum called Money Savvy Generation and started teaching it at her daughters’ school.

The American Business Journal profiled her in its June/July issue.

In an interview with Martha Stewart Radio, Beacham said that people’s attitudes toward money are molded by age 13. To take advantage of this, marketing campaigns target children as young as 18 months. Marketers understand that the earlier they reach a child, the more likely they will be to attract a customer for life.

Therefore, it is especially important for parents to model good behaviors and get kids on the right track early. Beacham emphasizes that this as important as teaching a child to brush his teeth, say “please” and “thank you,” and use an indoor voice.

She believes that the keys to success are self-control and delayed gratification, and these are learned behaviors, best learned by thinking about money in terms of choice.

To teach kids to make choices about money, Beacham designed the Money Savvy Pig.

This pig is an offline version of what we at AgentPiggy are building online. We agree with Susan Beacham: it is crucial that children learn to manage money as early as possible, and the best way to do this is to give them fun tools to manage their own saving, spending, investing, and donations.

What if AgentPiggy could automatically send text messages about money management directly to the kids’ phones, to remind them to make smart decisions?

By giving kids these tools, in the form of text messages and toys, we can build a more financially savvy future!

In last week’s blog, Allowance: To Give or Not to Give, we ended with a tip hinting what we would be talking about this week: saving. Now that you’ve started educating your kids on what money is and how they can earn it, it’s time to begin teaching them how to save their newly earned cash. We suggest having your child put about 30% of their earnings aside. Saving is crucial to their financial well being as an adult, and the earlier you teach this, the better.

You could force your child to put money aside, but there are numerous fun and rewarding ways to teach them both how and why to save. As we mentioned last week, one of our favorite tricks in educating children how to save is to ask them to pick out something they want. By having a set target objective, you can begin teaching them ways to both earn money as well as save it. You can take this a step further by putting a picture up in the room or perhaps the refrigerator to remind them what they are saving up for.

Wish lists are also great tools in teaching children to save up their money as well as prioritize purchasing decisions. As they turn to you asking for toys and other things, have them write it down and show them how they can purchase these items themselves if they save up their allowance and earned money. Using goal oriented tactics such as this are extremely successful in educating children on the value of money and why they should save theirs.

Children like to model after their parents behaviors. Set an example and teach them to save money through your own personal actions of saving. It’s always a good idea to show them what to do instead of just merely telling them.

While it is important to set goals (in some of the examples listed above), make sure that they are realistic and obtainable. Remember, our child’s attention span and patience is not quite as robust as our own. It is important that your child is able to see the progress he is making in working towards those goals. Talk with them about their progress and praise them for a job well done. Teaching your children to save is one of the most important lessons you can pass down. We commend you for your past and present efforts to ensuring your child has a financially healthy future.

Tip for next week: Learning to save requires our children to make responsible spending decisions. Teaching our kids the difference between wants vs needs is very important to their financial well-being and something we’ll dive into a little further next week!

So, what tactics are you currently using to teach your children to save money?

 When I was 8 years old, my parents gave me a crisp $20 bill. And gave one to my brother too. Then, the four of us went straight to the biggest bank on the main street of my suburban hometown.

Every month, when statements from the bank arrived in the mail, and I’d open mine with the same enthusiasm reserved for Highlights magazines and birthday cards. Eventually my $40 grew to $40.04 and then $40.23 or so, thanks to the “miracle” called compound interest.

Over the next few years, thanks to birthday gifts and babysitting gigs, and eventually more formal jobs, my bank balance continued to grow. I don’t remember spending much of that money, even for tempting toys that my parents refused to buy me, like that historically-inspired doll, or clothes my mom didn’t think were practical, like pink jeans with rhinestones on the pockets.

Now, almost 20 years later, I still have my first savings account. I’ve upgraded it to a money market account with a higher interest rate, but I hardly touch it. I also have checking accounts and credit cards from the same bank. And to this day, I’ve never owned pink jeans with rhinestones on the pockets. My initial experience with that bank left a deep impression on me, and since then I have been loyal.

How about you? 

Most children are ready to receive an allowance by the time they are 5. Some start as early as 3! You want to make sure they are at an age where they are able to understand the concept of money and how to manage it. A good age to begin is when they are old enough to begin counting money. This would also be the appropriate time to start providing them with a weekly or monthly allowance. While some parents do offer their children an allowance with no strings attached, others compensate them for accomplishments (tied to chores).

Some parents believe that household responsibilities are part of being a family and should be free of condition. Some set up a steady weekly or monthly allowance to begin teaching their children the value of savings. Others offer real world experiences like helping out with “extra work” such as washing the car to earn some cash.

Others believe adding chores into their daily routine can begin teaching them valuable work ethic, and in turn, how to earn money. Instead of cleaning their room for them, they show them how they can make money by cleaning it themselves. In doing this, they teach them that work yields rewards. Of course as children get older they can start earning money outside the house through things such as babysitting and yard work for the neighbors.

Many parents do a combination of the different ideas listed above. Either way, introducing the concept of money at a young age helps instill the financial literacy they will carry with them into their adult life. By allowing them to earn money and eventually begin paying for their own things, you are teaching them to make more informed purchasing decisions and prioritize spending. At AgentPiggy, we believe in choosing whichever one is right for you and your family. Earning, of course, is a prerequisite to saving. Once you’ve taught them how to earn money, it is time to teach them how to save it!

Tip for next week: One of our favorite tricks to teaching children how to save is to ask them to pick out something that they want. By having a set target object, you can begin teaching them ways to earn money as well it’s value. It is best to help them chose an item that isn’t too expensive and is obtainable within a few short weeks. Before they reach their goal, they will be tempted with other items. Remind them that they have a larger purchase in mind, but that it is up to them where their money goes.

Do you give your kids an allowance? If so, how do you structure it?

Do you want to make sure your child is ready to take on the world (ahem, manage their own finances) after leaving your nest? We’ve scoured numerous parenting books as well as spoken with lots of educators and have found that most miss out on one essential ingredient – teaching kids about money. Over at AgentPiggy, we believe that a healthy financial education is important to ensuring the well being of our kids and the future generation.

Out of hundreds of companies that applied, ours was chosen to be a part of Startup Chile! This program is backed by the government of Chile and has gained international recognition. We are excited to be alongside entrepreneurs from all over the world and be funded by a government who supports our idea.Our team is here building an online piggy bank (aka AgentPiggy) to help educate our kids about money in order to provide them with a financial head start. We think that giving your child an allowance is a great way to begin teaching them about working for rewards. By providing an allowance, you are able to equip them with a learning experience while showing them how to manage their own finances.

On this blog, we’ll write about the financial literacy that is important to instill in your child to secure a more fruitful future. Together, we will discover ways to teach our children fiscal responsibility in a world full of conspicuous consumption and an ever changing economy. We’ll also be sharing stories we run across and hear from users.