9 Tips For Raising Money-Wise Kids

1)	Begin the process early – Most experts agree that parents can begin teaching financial skills to kids as young as 5. As soon as your children can count you can show them different coins and their relative values. Make change together. When shopping, if an item costs $3.50, explain why you give the clerk $4.00, and get 2 quarters back.
2)	Be a role model – What messages do you send your children? Are you living beyond your means? Do you pull out the plastic for every purchase? Do you and your spouse worry or argue about money? Examine your money habits, and make any changes you think necessary. When you exercise good financial judgment, you are automatically teaching your children by example. That’s a win-win situation for all.
3)	Talk about it – Try to include your children in the family’s money management activities, and use them as jumping off points for discussions. • Show the kids your bills, and explain how purchases made earlier must be paid for now. • Demonstrate how you set your long-term purchase/savings goals, and systematically go about achieving them. • Let the kids help you clip coupons and search through sale circulars. • Urge the family to turn off lights when leaving the room and teach them other household economies. • Show them how you can watch your investment activity in the newspapers or on TV, and explain what the numbers mean.
4)	Needs vs. wants – Do your kids know the difference? Instant gratification may help end your little one’s tantrum in the store, but you could be doing him damage in the long run. The fact is, everybody has to make financial choices and sacrifices. The sooner your children understand that, the sooner they’ll become skilled at using money to cover their needs, and saving it up to satisfy their wants.
5)	Help them set goals – When your child wants to buy a large or expensive item, plan together how much money he’ll need to save from weekly allowance or gifts. You may also choose to offer ways he can earn more money by doing chores. Remember to monitor the progress regularly, as the savings grow and the goal comes within reach.
6)	Charge interest – If you lend small amounts of money to your kids, requiring them to pay interest is a powerful way to help them learn how expensive it can be to borrow. That’s a lesson that should be taught early. With today’s youth accruing debt in staggering amounts, your child needs to understand at a young age the potential dangers of purchasing on credit.
7)	Make them ad-savvy – We live in an increasingly consumer-oriented world. Your kids must understand that there are thousands of companies trying to catch their eye and get their money. Teach them to recognize and resist the temptations of advertising. Discuss the marketing of designer labels, team-branded clothes and similar high-cost items compared to other choices. Help them de-bunk all the promises and glitter, and encourage them to base their spending decisions on need and value.
8)	Let them make mistakes – When your children mis-spend their own money, the lesson becomes more vivid. At this age, the financial mistakes are not huge, but the lessons can help them develop good money habits for life.
9)	Open a bank account – What better way to demonstrate how savings can grow than by bringing your children to the bank, filling out that deposit slip, and seeing the new account balance. Besides encouraging their saving habit, it’s also a great way to help them understand how interest is compounded.