How to Teach Children Money Management

Teaching children how to manage money is vitally important to their future. You'll have to start out basic so they can understand, but over time you can help them grow to understand quite a bit.

Difficulty: Moderate

Instructions

Things You'll Need:

• Piggy Bank
• Allowance
• Solid teaching skills
• Practice what you preach

1. 
   Even pennies can be very important

   The first thing you need to do is start out with the most basic of all money lessons for a children, the piggy bank. In the grand scheme of things as a mature adult you realize that the piggy bank likely won't have a lot of money in it, but it will be very important to teaching children money management. Encourage your child to save money and put it into their piggy bank. The goal is to have your children be excited to put that money in the piggy bank.

2. As your children start to get a little bit older, give them a small allowance to do special chores around the house. It is important that you not give them a lot of money, but a small amount helps teach them of the rewards of doing good work. While teaching money management skills you also teach the benefits of working hard.

3. Teach your child that they can't always get what they want. It's one of those lessons that they won't appreciate at the time, but in the long run it is definitely good for them. Sometimes the answer must be a firm no, and they will have to understand that.

4. 
   Show them about banking and interest earned

   Set up a savings account at your local bank for your child. Even if the amount is very small it is a great idea for you to contribute a little money to something like a money market or a certificate of deposit to introduce children to earning interest on their money. Show them the returns that the money invested has brought in.

5. Probably most important of all of the steps is that you must practice what you preach. No child is going to be able manage money well if they are following the example of parents or guardians who mismanage their money. If you are teaching children about money management you are going to have to be frugal and mange your money well too.

Tips & Warnings

• Start out small and make the lessons more complex as the children get older.
• Remember these life-long lessons are well worth your effort!
• Don't constantly try to teach children about money management. The goal is to want them to like it, not despise the lesson

Resources

• http://www.marketwatch.com/pf/started/GettingStarted_KidsMoney.asp

[mattsaboy]

on 10/14/2009 Great artile on teaching kids money lessons. 5 stars