How to Teach Your Kids About Money

Too often young adults learn about debt and the importance of establishing
good credit the hard way--by digging themselves out of a hole.
Instill the value of saving versus spending and you'll help your child
grow up to be a fiscally responsible adult.

Instructions

    • 1

      Examine your own attitudes and habits about money. Parents are good at preaching, but if you repeatedly waste money, that's what your kids are learning. If you talk about wanting a new digital camera and the next day you run out and buy one, you've sent the message that you can get whatever you want whenever you want it. If, on the other hand, you set up a savings plan to pay for a camera, your kids get a valuable lesson in deciding whether something is important enough to wait for. And when they see you socking money away for it, you've sewn the seeds of wise money management and delayed gratification.

    • 2

      Set a good example by creating a spending plan with your spouse. Show kids that setting up a budget doesn't have to be complicated. First, pay yourself: Put aside money to meet your financial goals (savings, emergencies). Then pay your bills. Now divide up what's left to cover food and other necessities--and don't spend more than that. See 226 Set Up a Budget and 228 Design a Savings Plan.

    • 3

      Invite your children to participate in financial discussions. When kids are old enough, go ahead and show them how your income gets divvied up into mortgage, food, taxes, bills and clothes. Talk about your own goals--eliminating debt or saving for big-ticket items like a new car, college or a vacation--to prompt contemplation of their own savings goals.

    • 4

      Give your kids a weekly allowance. This is money just for being part of the family and taking care of basics, such as picking up toys, making beds and not leaving towels on the bathroom floor. A dollar for every year of age is a good amount. Give kids total control over how they spend their allowance. The whole point is to let them learn from their mistakes.

    • 5

      Create opportunities for older children to earn additional money with jobs such as washing the car and mowing the lawn. This is the time to instill appreciation for a job well done and getting paid for your efforts. Teach them that they can get what they want through hard work--not because they are entitled to it.

    • 6

      Set up a checking account and give teens a lump sum of money to cover all nonbasic expenses--gas, insurance, clothing, shoes, entertainment, gifts, video games, eating out--for a month. Gradually build up to six months as they gain confidence and competence at living within a budget.

    2. Previous:

    Next:

    • Financial Help for a Disabled Child
      No matter what the circumstance or the ailment, caring and planning for a special needs child is never an easy thing. In addition to the emotional stress that is present, the financial pressures can sometimes be enormous. Not only is there the prospe
    • How to Write a Satisfaction Survey for Kids
      Whether you are inquiring about a summer camp experience or a recent video game system purchase, getting feedback directly from your kids and other kids is a helpful way to plan for next season, make necessary changes, or discover what you are doing
    • How to Decide on an Age Appropriate Allowance
      When your child begins to express a desire for his own money, it might be time to introduce an allowance. There is no age when an allowance is necessary, though, generally, a child should begin earning an allowance by the age of 10, according to Kids