Teaching Children about Money
Some Hints to Help Parents Train their Kids to be Cash-Savvy
Whether the economy is bullish or bearish, teaching your children some basic money principals can ensure their security no matter what happens.
Many children don't get positive lessons in money management that they can take into adulthood. Like many other lessons in life, children tend to learn about money through their parents' actions, not words.
Parents normally teach by example one of two extremes about money, according to money experts - either they horde money out of fear or anxiety or they buy a child everything he wants.
Money Guidance that Lasts
In today’s economic climate, it’s important to instill young folks with strong basic money principals that can ensure their financial security whether times are boom or bust.
When looking for guidance on teaching kids about money, there's no shortage of advice from parents, psychologists and financial planners. Books abound, and an Internet search can turn up more than 1 million Web pages that have something about kids and money in their content.
But that advice can be contradicting.
Should an allowance be tied to chores? Should children be forced to save a portion of their money? Should they be allowed to buy whatever they want?
Like many aspects of parenting, it depends on the child.
A child who likes to horde should be encouraged to spend a little – while continuing to save for the future. Other kids need to be instructed to save.
Instead of making hard rules on how children spend their money, parents can try setting up consequences. For example, if a child spends all of her money and sees something she wants, she doesn't get it until she has more money saved to pay for it herself.
It can be a good idea to tie an allowance to some chores, but not basic chores that should be part of the child's contributions to the family, many money coaches say.
Not being consistent with allowance guidelines is a common pitfall with parents. So is being too punitive with money - taking away money because a child is "bad," even if specific chores have been done.
And while children should have choices in how they spend their money, parents should keep an eye on what their kids buy, especially when they become teen-agers.
Parents can find plenty of resources, on and off the Internet, to help them teach their kids to be money-wise:
Some online resources:
Investing for Kids - a Web site by kids, for kids, examines stocks, bonds, mutual funds and other investments. It also includes a stock game.
Springboard, (formerly the National Center of Financial Education) - general information about personal finance and materials on raising money-savvy kids.
