How to teach kids about money

Financially responsible adults were probably taught their skills as children. Parents need to realize that children are in their prime for learning life skills, and money skills should not be overlooked. Follow thesr tips to make your teaching fun and lasting.

Instructions

Difficulty: Easy

1. Allow your children to make financial decisions. Give your children the power to decide whether something will be a good purchase or not, by informing them of pros and cons about a certain purchase, and do as they say. If you believe it was a poor choice, explain why and give your children an opportunity to try again.
2. Teach your children about advertising. Explain to them that what they see may not be true, and that they should not believe everything they see.
3. Tell your children about the dangers of borrowing and allow them to experience it. If thet get an allowance, allow them to spend more than what they get if they really want a certain something, but alert them that next week/ month they will get less money because of it. Make sure you do give them less money the following week/ month so they can see what borrowing does. Explain to them that they are paying you back.
4. Teach your children to organize themselves financially. Help them write down their expenses, how much they have saved and how much they earn. Encourage children to keep receipts for all purchases so by the end of the year they can calculate how much they have spent, and whether they could have saved.
5. Teach your children to have financial goals. If they want a certain toy, advise them into saving for it by setting goals throughout until they achieve it. This goal setting helps children become responsible and think for themselves.
6. Teach children the difference between needs, wants and wishes.
7. Teach children about how credit cards work. Teach them that credit cards are not free money, and they are not to be used when you do not have money, but they are a way of not having to carry cash with you.

Tips & Warnings

• Give your children an allowance, even when it is small. Make them responsible for it.
• Always offer advice on a child's spending habits.