How to Make Children Savvy About Money

Teaching children early on about money is important to helping a child build a solid future. Here’s how to teach a child to be savvy about money and their financial future.

Difficulty: Easy

Instructions

1. 
    

   Buy your child a piggy bank.
   
   In order for your child to learn about saving, they'll need an immediate place to store and save money.
   
   A piggy bank gives your child the ability to see and feel (weight) their money grow.

2. Tie allowances to chores above those normally assigned.
   
   Don't pay your child for doing normal household chores. They shouldn't be rewarded for being a contributing member of the family. Instead, assign monetary value to extra chores completed around the house. An incentive program so to speak. Just like a work.
   
   Make sure the extra incentives are only an option after completely fulfilling mandatory household obligations.
   
   Plus, when regular obligations aren't fulfilled...dock your child's allowance accordingly.
   
   In doing this, you're teaching your child money is rewarded for a completed job well-done, nothing in life is free, they aren't always the ones in control and failing to carry-through has consequences.

3. Limit gifts you purchase for your child. Instead encourage your child to save for what they desire.
   
   Limit special gifts and those given "just because" for truly special occasions. There are other ways to show love.
   
   Instead, if your child wants something special, encourage them to work and save for it.
   
   They'll have options such as:
   
   a. Saving a percentage of their allowance.
   b. Working harder by completing extra incentive chores.
   c. Delaying gratification by making better choices about thier money.
   
   Offer to the match their savings up to a certain amount. What a way to teach and demonstrate the basic principle behind a 401K savings plan.

4. Teach your child how to make money on their own.
   
   With the advent of the internet, you can help your child sell (through you) unwanted items around the house, in their toy bin or items collected from neighbors.

5. Take your child to the bank with you to make regular deposits into your account and theirs.
   
   If the child is old enough, teach them to actively take part in the banking deposit process and the management of their passport savings book.
   
   They'll learn about math and money management with little effort.

6. Teach your child about stock and investing.
   
   Many companies offer direct stock purchase programs, which means you can purchase stock directly from them bypassing an individual stock broker.
   
   Talk to your children about what they like and purchase related stocks in your name and theirs. For example, The Walt Disney Company offers a direct stock purchase program.

[katharineann]

on 6/3/2009 Excellent article! As a teacher, a really do see how children are not being given enough skills to be successful with money later on. 5* and a rec!

[gahazeleyes]

on 5/28/2009 I agree with you. Thanks for a well written article. 5*