How to Raise Financially Responsible Kids

If you want your kids to learn financially responsibility, it's wise to expose them to the concepts while they're young. Here are ways to begin teaching kids the fine art of money management.

Difficulty:

Moderately Easy

Instructions

Things You'll Need

• A piggy bank
• Coins
• Patience
• A positive attitude

1. Begin small. As soon as your kids show interest in coins, they're ready to learn elementary financial basics. Kids as young as four can recognize coins and begin counting. Let your six-year-old count out change. Help your child figure out how many coins a treat might cost. Talk about the price of items as you walk through the store. When they are comfortable with coins, move to dollar bills. Let them count the exact amount and pay the cashier.

2. Keep it simple, make it fun. Mastering money management is like learning any other new skill; it takes time to get the hang of it. Keep it simple so that the kids won't get discouraged. Sprinkle learning with fun and their interest in the subject will grow. Gather up pennies, count pennies and store pennies in piggy banks. Talk about the various dominations of bills. Let them see what all denominations of bills look like.

3. Start early. Give age appropriate allowance. Deciding on the amount of allowance depends on several factors including your budget and the kid's age and temperament. Some kids are able to grasp the concepts of saving, budgeting and spending quickly, while others need practice time to grasp exactly what makes money shrink so quickly. Most kids can benefit from learning to manage a weekly allowance. According to one study, the average weekly allowance ranges from $2 for six-year-olds up to $25 for 17-year-olds. If you feel shaky giving a six-year-old an allowance, think about this: young kids are more apt to listen to what parents advise. Tweens and teens are influenced by pop culture and peers.

4. Increase allowance as responsibility increases. Talk through with your teen what the expectations are. As spending habits increase, so do the responsibilities to cover more of one's own expenses. For example, teens can usually handle clothing allowance.

5. Talk about financial matters. Some folks have the idea that it isn't polite to talk about money, bills or banking and all money matters are off limits and considered impolite conversation. But if you make money talk taboo, how will the kids ever be comfortable discussing finances? For example, if your family is involved in purchasing a new car, a new couch or something for the house, let your kids in on the discussions.

6. Allow for spending mistakes. Don't expect money management perfection. Kids will make mistakes by spending too much or forgetting to factor in all expenses. Others will save every penny, expecting you to buy what they want and need. Making mistakes is part of learning about money style and expectations. Negotiate what the expectations are, bail them out once in a while, and eventually they'll get the hang of it.

7. Spend a little, save a little. By adopting the spend a little, save a little money motto and putting the principals into practice, eventually you'll get the hang of living this way and the kids will adopt that policy too. When kids hear their parents recite the money motto, they'll soon think it's a normal way to manage finances.

8. Keep at it. As you know, practice makes perfect. Don't expect that your your kids will be experts in the art of money management, but with practice and coaching, eventually they'll grasp the concept. Make it fun. Keep it simple.