May 30, 2012 • Buyers Guide
Growing up in a time of economic struggle,today’s kids might be inadvertently learninglessons about money. If Mom and Dad havebeen forced to cut back or even lost theirjobs, chances are kids have noticed andlearned something as a result.Even if parents have managed to weather theeconomic storm of the last several yearswithout making too many sacriﬁces, they canstill start teaching kids about money, even if kids have just entered kindergarten. It’snever too early to teach kids lessons aboutmoney. The following tips are a few waysparents can do just that.
Give kids an allowance.
Many parentsgive their kids an allowance so they can havesome spending money when out withfriends. But giving an allowance is also agreat way to teach kids about managing theirmoney. Start with an amount that is small butlarge enough for kids to make purchases. Inso doing, kids will learn that things theywant cost money and that properly managingtheir money will enable them to purchase thethings they want. If kids spend all theirmoney by Monday and don’t get theirallowance until Friday, resist the temptationto give them more money if the kids ask forit. This, too, will help kids learn the value of managing money.
Open a savings account in yourchild’s name.
Another way to teach kidsabout money is to open savings accounts intheir names. Once the account is opened,take your child to the bank once a week todeposit a predetermined amount of money.This shows the child the importance of steadily saving money. It might be difﬁcult atthe outset to get kids into this habit, but oncethey make savings deposits part of theirroutines and their balances start to grow, theywill likely grow more enthusiastic abouttheir weekly trips to the bank.
Encourage kids to document theirﬁnances.
Encouraging kids to documenttheir ﬁnances, including deposits,withdrawals and expenditures, is an effectiveway to teach them basic ﬁnancial analysis. If the bank supplies savings books, make surekids use them. But go one step further andgive kids a ﬁnancial journal where they candocument all of their purchases in addition totheir deposits and withdrawals. Suchdocumentation enables kids to analyze howthey spend their money. Periodically go overthese expenditures with children, and if they’re frustrated about their saving andspending habits, work with the children todevelop more effective strategies. Kids mayappreciate these small lessons in analysisdown the road when it’s time to purchasetheir ﬁrst vehicles or ﬁnance a largerexpense, such as their educations or eventheir ﬁrst homes.
Help kids make largerpurchases.
Helping kids make larger purchases, be it anew bicycle or a video game console, isanother way to teach them about money.Such purchases teach kids about longtermﬁnancial goals, and how it’s necessary tostay diligent with savings in order to meetthose goals. Paying for half is a good way toreward kids for meeting these longtermgoals.It’s never too early to start teaching kidsabout money, and parents can do just that ina number of ways.