How You Can Teach Your Children to be Smart With Money

How many times have you heard it said that kids these days don't know the value of a dollar? How many times have you said it yourself? "Smart Spending Habits" and "Investing 101" are both not things that are taught in schools. That's right, it's up to you, as parents, to teach your kids how to be smart with their money.

As soon as your children can count, you should begin to educate them on the value of money. When you're unable to afford toys for them, telling children "We can't afford it," can often be detrimental to their mindset. Often they will think the only way to be financially happy is to be rolling in riches. Instead, you should "choose not to" do something. It teaches your children that even though it would be more fun to have that latest gadget or whatever, sometimes intelligent decisions need to be made about finance.

You should always explain any questions they might have. Teach them the value of saving money. Setting up a weekly allowance (in exchange for chores) is a good idea. Tell them that they should put about 10% of their allowance in the bank just in case they get sick and aren't able to earn an allowance for a few weeks. Or maybe they wont do a very good job and wont get paid as much. Once kids have an allowance, they should always be expected to pay for toys that they want. This is assuming they aren't presents or gifts, of course.

Getting your kids started in a business is an effective way of not only teaching them about money and finances, but also instills a good work ethic. Even if you have an allowance system set up, they can earn an extra fifty cents or so for any extra chores they wouldn't normally have to do. Otherwise, you can pay them for different chores on an individual basis.

Teaching your kids to save money is as easy as getting them a piggy bank. Try and pay them in whole amounts and encourage them to put their change into it. Once it gets full, put it in the bank for them and give them a portion of it to spend on whatever they like.

If you're unhappy with how your child is spending their money, you should talk them through each of their purchases. Never try and talk your son or daughter out of buying something, but always educate them about what they're doing. For example, if Lisa wants to buy a teddy bear with $5, which is all she earned, you should let her know. Something like, "That teddy bear is worth $5. That's all the money you have. If you want to buy that, you wont have any money to buy anything else until you get your allowance again. Is that OK with you?" If it is, then buy it. If they want to know what you would do, a good response is to tell them that you'd wait until they got their next allowance, and if they still wanted it, buy it then.

Above all, remember that the value of money isn't something that you can teach your children in one sitting. It must be a consistent and ongoing process.