Introduction
Raising financially savvy kids begins when they are young. Many adults don't fully understand how to budget, manage a credit card or even balance a checkbook. Teaching kids about money when they are young will give them a clear advantage when they are adults. Kids and money isn't a complicated topic, as these tips will show.
Step 1
Start a savings account for your kids money. Children should learn to begin saving when young. While it's optimum to begin a savings account when your baby is born, it's also important for them to begin actively saving once they are old enough to understand the concept of money. For younger children, use a simple piggy bank so they can see their savings add up. Take them to the bank and help them set up their own savings account. Simple savings categories for kids include short term savings, long term savings, and charitable giving. Older kids can start saving for specific goals, such as a new bike, a car or even part of their college education.
Step 2
Teach your kids how to budget their money. Budgets are a fact of life. With kids money, the budget may start out simple. Help your child set both short term and long term financial goals. Supervise them as they drawing up a plan for the kids money, such as saving a percentage of their allowance for a short term goal, such as a new toy, and setting aside another percentage for a more long term goal, such as spending money on a large family vacation. Older children can be entrusted with more in depth budgeting. You can give them money for their clothing, dining out and personal care needs once a month, then help them come up with a budget so they don't run out of money before the month is up.
Step 3
Kids should earn money. Give kids money as an allowance for chores or other odd jobs around the home when they are younger. Not all chores need to be tied in to an allowance, but a few should be so kids make the connection between money and effort. As adults we must work to earn money, and so should kids. Older kids can get an after school or summer job to further learn about kids and money. Encourage an entrepreneurial spirit, too. Baby sitting, lawn mowing and pet sitting are a few jobs your kids can do for neighbors and friends to earn money.
Step 4
Tip 4
Include kids in money decisions. You may not want to share all your financial information with your children, but you should have them sit in on some family budgeting or bill paying sessions. Kids learn about money best when you model the knowledge. Let them see where your paycheck goes, get them used to how a checkbook works, and make sure they understand credit and debt issues. Older kids can have their own checkbook or debit card, which gives them first hand knowledge on how to balance a bank account and keep their finances in order.
