How to Teach Your Child About Money

Learning about money is one of the most important aspects of life. And with the flailing economy and other financial concerns in the world today, teaching your child about money has never been more important. This doesn't need to be a daunting task, though. Teaching money skills and techniques for saving can be rather simple if you have the resources and the patience to do so. Here are some tips and suggestions to help you teach your child about money so they can become responsible adults.

1. Start early. As soon as they are able to understand the concept of money, explain to them how mom and dad get money. Many young children simply think you can write a check or go to the "money machine" to get money. But explaining to them the concept of working at a job, receiving a paycheck and other basic money skills will help them learn more about finances.
   
   
2. Be an example. Americans are billions of dollars in debt. And most of that is a result of credit cards and irresponsible spending. You can't expect your child to learn about money if they always see you make purchases "on plastic" when you don't have the money to purchase items in the first place. Allow them to see you want something and not getting it because you can't afford it (even if you have to pretend that you want it). This will teach them that they, too, can't always get what they want.
   
   
3. Find teaching moments at the store. Making teaching moments is something that every effective parent has learned how to do. When you're at the store with your child, they will likely want to buy something they want. This is an ideal time to explain the concept of not buying things when you can't afford it. Explain how you budgeted enough money to buy food and other things are simply not within your budget. They might not like it at first, but it will be a valuable lesson that they'll remember in the future.
   
   
4. Play Monopoly. Monopoly is a great way to teach your child about money if they are old enough to play. Explain the concept of spending and saving money during the game, but allow them to make their own money decisions as you play. This will give them a better idea of how to handle their own money when it's real.
   
   
5. Teach them about wasting money. If you're like me, you're probably the dad that follows the kids around and turns off lights and water faucets as they leave each room. If you start teaching your young children about water bills and electricity bills, you can train them to keep their waste to a minimum. I've even seen some kids find ways in which their parents are wasting and "scold" them for doing so.
   
   
6. Give an allowance. By giving your child an allowance, they how to budget their own money and they get to do it in a real way. Make the allowance age-appropriate and make it a weekly event with a ritual, like a paycheck, so they can look forward to it. Then, make sure you don't ruin the idea of the allowance by purchasing things for them (except food and basic necessities, of course) when they run out of money.
   
   
7. Explain the power of saving. Make suggestions to them about saving some of their allowance money each week. Explain how much they could save in a few years by just putting some of their allowance in a savings account. Just two dollars each week gives them more than $100 at the end of the year. Involve them in putting their money into an account and they'll be excited about saving each week. After a while, it will just come as second nature to them.
   
   
8. Get them involved in the family budget. Without giving them any details that they don't need to know, let your children help with the family budget each month. Make it fun by creating a colorful chart and posting it on the fridge or somewhere else where they can see it. Explain how much money you have to work with each month and the bills you need to pay with that money. This will help them grow up and budget their own money responsibly.
   
   
9. Learn to say "no" It might be hard when you're at the store to say "no" to your child when they ask you to buy them the newest Spider Man toy because they spent their allowance. But this is where a teaching moment comes in. Explain to them that they could have bought the toy themselves if they would have saved their allowance like you told them to do before. It might break your heart to see their crying face, but they'll remember to save their money the next time you give them their allowance.

Learning how to teach your child about money might seem difficult, but it is one of the most important things you can do to raise a responsible child. They might not like some of the lessons at first, but they'll learn how it helped as they grow older. Be strong and consistent and your child might even have more money than you do when they have children of their own.

Other helpful links:
CNN article on raising financially savvy kids