Things You'll Need:
- bank account
- knowledge
- money
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Step 1
Setting a good example is perhaps the most effective way to raise a money smart son or daughter. Talking is one thing, but children learn by what they see. If they see you making wise choices they are likely to follow suit. But if they watch you buy items you cannot afford and sink into credit card debt they may model that behavior as well.
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Step 2
It is important to have age appropriate conversations about money with each of your children on a regular basis. For the younger kids it could be something as simple as putting a few coins in a piggy bank, while older kids can get involved by helping to sort the monthly bills. Seeing how much things like cable and online music purchases really costs can be a real learning experience for kids of all ages.
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Step 3
Starting a savings account is another great way to get your son or daughter off on the right financial foot. Many banks have special savings accounts designed especially for children, complete with child friendly activities and games that make saving fun. Parents can instill a desire to save by offering to match their child’s savings dollar for dollar. This not only provides a strong savings incentives but also mirrors a grown-up financial decision – investing in a 401(k). Kids who grew up with the “mommy match” on their savings will have a better understanding of the value an employer match on a 401(k) brings to the table.
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Step 4
One of the most difficult teaching challenges parents face is the ever present ATM machine. To young children it seems like money just magically appears from this mysterious box, and it can be hard to disavow kids of this notion. Parents who need to explain the mysterious ways of the ATM should be sure to sit their kids down when they get back to the car and let them watch as each transaction is entered into the checkbook. This lets the kids see the money – and any associated ATM fees – coming out of the account.
