Tips For Raising Money Smart Children

Ask savvy investors how they learned their first lessons about money, and they’ll probably tell you lessons their parents taught them. If you are a parent, teaching your children the value of money and savings will benefit them for the rest of their lives. Here are some tips for parents to help their children learn about managing money.

Get them interested early. When your children are very young (age 3 to 4), show them how to tell different coins apart. Then give them a piggy bank to store up their change. Piggy banks are a tangible place to keep their money safe, and they can see, hear and feel how the bank fills up.

Help your child begin to save. Open savings accounts for your children, and teach them how the bank adds interest to their savings that makes their money grow. Encourage your children to save a little from every bit of money they receive, such as allowances, birthday gifts, etc. Be sure to plan regular visits to the bank, too.

Give regular allowances. Allowances give children experience with real life money matters, letting them practice how to save regularly and develop a spending plan. Of course, you should determine the amount of allowance that you see fit, for example an amount equal to their age per week.

Encourage goal setting. Have your kids write down their short and long term financial goals like a skateboard by the end of summer, and a bike by next year. Visualizing may give kids the added motivation to save. You might also contribute a matching amount every time they reach a certain dollar amount in savings by themselves.

Help plan a budget. Have kids write down what they’ll buy during the week and how much each item costs. Then write down their weekly income. If it doesn’t add up, they’ll have to prioritize their “needs” and their “wants.”

Encourage money-earning ventures. To earn money beyond their weekly allowance, suggest that kids find creative ways to make money, such as doing special household chores or seeking jobs in the neighborhood such as raking leaves, mowing lawns, pet sitting or shoveling snow.

Let your kids handle their own money. We all learn by doing, so letting your kids manage a segment of their budget will let them learn valuable financial lessons. They may make mistakes, but they will be small mistakes that may help them avoid larger mistakes as adults.