Kids are never too young to learn about money.  Helping them learn the basics of money management early on will help form their attitudes about it – preparing them for a future of financial responsibility. With your guidance, your kids can learn about budgeting, saving and allocating financial resources wisely.

Financial management is a skill.  Like with any skill – from riding a bike to writing a poem – it develops with practice.  If you think your child can reach the age of 18 and go from spending money the moment they get their hands on it to learning to save part of the cash for later, you might be in for a disappointment.

Money management is a learned process.  More than a set of rules to be followed, it stems from well-formed attitudes about finances.  Even more significant, it’s a set of attitudes that can mean future financial success or a life in debt.

Allowance

Having some money of your own to manage is the single best way to learn about it.  Giving your child a regular allowance over which they can exercise some responsibility on is a great way to introduce them into handling their finances. 
Make sure to discuss with your children how the allowance will work.  Sit them down and have a conversation about their regular expenses so you can fairly assess how much they really need.  It’s important they understand the guidelines:

1. They will get it in regular intervals.

2. They can spend it anyway they want but if they spend it all too soon, they’ll have to suffer the consequences such as bringing packed lunch to school.

3. Be clear what expenses the allowance will cover so they know when they aren’t allowed to ask for more money.

Savings

Teaching children to save money will reinforce a positive habit that can really help them later on in life.  Start them on the path by encouraging savings on a piggy bank.  Encourage them to put a small amount in daily to get them used to depositing on it. Later on, if they are able to grow the savings, you can open a bank account for them.  Make sure to let them keep the passbook so they can see their money grow.

Everyday Money Matters

If your kid has questions about money, answer them openly. 

When you shop for items in a grocery or department store, let them know the reasons why you buy certain things and not others.  While it can feel tiresome at times, the process will help them develop critical thinking abilities with regards to financial transactions.

Make shopping plans with your child, especially when getting items for them.  That way, they’ll understand how planning before buying can help avoid impulse purchases as well as assist them in making the best possible choices.  While their attention may wane at times, look at it as a way to prepare them until they’re ready to make their own shopping lists.

Trust them with small purchases.  Let them buy their own little toys or candy, for instance.  Give them the money, allow them to choose and praise them for it.  It will help build their confidence that they can make correct financial decisions, however insignificant it may appear to you.

Lastly, don’t scare children with your own money worries.  If you’re in a tight budget, they don’t need to know much about it.  Let them feel secure financially and they’ll likely carry the same confidence for the rest of their lives.

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