When you consider the precarious states of the global economy, it is slightly surprising that U.S. consumers continue to spend recklessly and accrue growing levels of debt. During the third financial quarter the average level of credit card debt per borrower rose to $4,996, which marked a significant 4.9% increase over corresponding figures from 2011.

This worrying trend is also present in other countries throughout the world, with Canadian consumer debt loads currently growing at their fastest rate since 2010. As statistics revealed a 4.6% increase in credit card debt during the third financial quarter, and it appears as though citizens are continuing to spend beyond their means and incur long-term financial liability.

The Importance of Teaching Children the Value of Money
With these soaring levels of debt in mind, there is a growing demand for educational bodies to incorporate money management skills as a fundamental part of the curriculum. The idea is to empower students and enable them to understand the true value of money so that they can develop long-term savings and responsible spending habits. Watertown High School in Wisconsin is one of the leading players in this movement. It has educated students on the dangers of credit and provided them with bank-issued debit cards to help them learn about consumer spending.

Parents also have a key role to play in teaching their children the value of money, especially in terms of the attitude that they cultivate towards spending and saving. The American Institute of CPAs reported in August that although U.S. children receive an average annual allowance of $780, the majority of this money is committed to expenditure rather than long-term savings. Aside from setting a more restrained example, however, parents must also find new and innovative ways to impart the value of hard earned and carefully saved capital.

Christmas Gifts that Teach the Value of Money
Renowned as a time of giving, the festive period provides an ideal opportunity for parents to teach their children about the value of money and how it can be invested to create long-term wealth. There are a number of innovative savings plans and account types available through financial institutions, which help youngsters to both develop savings and learn invaluable money management lessons.

Invest in a 529 College Savings Plan
A quick look into 529 Plans shows many opportunities. Not only is it an opportunity to save money within a restricted budget for a child's education, but it also proves as an extremely important fiscal lesson for them, and some child-focused savings accounts teach this through the application of contribution limits. With this in mind, a 529 College Saving Plan provides a well-regulated environment that enables children to make small but regular contributions over time. Ideally suited for older children, this gift idea also empowers youngsters to develop an understanding of the importance of an education and how to save responsibly.

Open a Coverdell Education Savings Account (CESA)
In terms of teaching financial responsibility, it is important that you educate your children on the importance of effectively deploying their resources. By opening a Coverdell Education Savings Account (ESA), both you and your children are given greater flexibility to decide how and when the accrued capital is spent, as under its guise elementary and high school costs count as qualified education expenses. While this savings plan carries a contribution limit of $2,000 per annum for each child, it can at least be utilized according to the individual needs of each beneficiary.

Contribute to a Kiss Trust
While both CESA's and a 529 College Savings Plan teach infants to save within their means, they are fairly restrictive in terms of empowering them with flexible money management skills. If you wish to teach your children the importance of decision making when it comes to developing financial savings, however, then a Kiss Trust Savings Plan may be a more suitable option. A Kiss Trust will remain in the donor's name which enables you as a parent to assume control and offer guidance where necessary.

The Bottom Line
The concept of teaching money management to children is an extremely topical one, especially as the global economy continues to suffer significant decline. It is crucial that the next generation of adults learns how to live within its financial means while understanding the fundamental advantages of saving money to achieve long-term ambitions.

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