Everyone wants their children to be successful and happy, but many people are seeing the next generation falling further into debt. There are some clear and simple ways to help your children deal responsibly with money, ensuring that they will have enough for their future!

1. Children will pick up on your values. This is really a case where you need to be careful to practice what you preach! You can talk as much as you want about how your kids should save money, but if you are always “impulse buying” and constantly in debt, they will learn from your actions. Show them, don’t just tell them, what you want them to learn.
2. Give your children an allowance. As soon as children are old enough to handle money, give them an allowance. Start with a very small allowance when your children are very young and help them understand what they can buy with it. Continue this as they grow up.
3. Help your children save. When your children are still in elementary school, open a savings account for them. Explain the basics of interest to give them an incentive to save. You can also propose a “matching funds” program; if your child deposits $12, you will add another $12!
4. Teach your children about goal-setting. No child wants to put off buying a candy bar or a new toy with her allowance. Sit down with her and make a little chart explaining what she can buy with her allowance if she saves her allowance for one week, two weeks, or a month or more.
5. Teach your children the difference between needs and wants. This is difficult for us adults too, so no wonder kids get mixed up! Talk about what real “needs” are and what things are wants. Having something be a “want” doesn’t mean you can’t get it, but it does mean that maybe you need to save up for it. This is another situation when leading by example is best!
6. Budget with your children. Depending on their age, it may not be appropriate to pull out the spreadsheets. However, even a first-grader can write down the date and amount spend on a toy in a notebook. Doing this will let you teach your children how to track their spending. Older children can be given a larger allowance and be responsible for their own toiletries, etc., after making a budget with you.
7. Sometimes, let your kids make poor decisions. How many of us had to learn from our mistakes. Telling your child what to do or bailing him out will not teach a lesson nearly as strongly as your child experiencing disappointment when he has already spent his allowance and comes across something he really wants to buy. It’s hard to see our kids disappointed, but sometimes it’s what is best for them.
8. Explain interest on borrowed money. When your child is old enough for it to be appropriate, explain interest and offer to lend money, but insist that it is paid back with interest. This will turn them off of loans quickly, except when they are necessary!
9. Talk about advertising. Children (just like adults!) are very susceptible to advertising. Explain to kids that advertisers often make products look better than they are, as well as all the other tricks found in advertising.
10. Teach your children to use credit cards responsibly. Check out our other article on responsible use of credit cards. Credit cards can be wonderful tools when used correctly, but many kids go off to college without any idea how to use them responsibly.

Remember, as with many things, communication with your children is the best tool around! Children are more influenced by their parents than they care to admit!

This entry was posted on Wednesday, October 24th, 2007 at 3:18 pm and is filed under Shopping Tips. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.