Kids need to know three things about money: How to make it, how to spend it and how to save it.
They probably won’t learn it in that order, but they will learn all three in time. If you want to help your children become successful with their money, you have to teach them the right way to do all three.
Making money can be done several ways, from legally to illegally and a lot of shades in between. If you want your kids to know how to make a decent and honest living, they have to learn the value of work.
Some parents give an allowance with stipulations like keeping their rooms clean and so on, and help their kids learn that way.
Others pay their kids for certain jobs like mowing the lawn or shoveling snow. Whichever you choose, the main idea is to get money into their hands in response to something they have done.
They can’t learn to deal with it until they have it and working for it in some way gives them a basic idea of how the world operates.
It doesn’t make sense to give your children money, then buy everything they need or want. That defeats the purpose of giving money.
When you first give your child money, take the time to sit down and explain what it is, what you expect them to use it for and why you have given it to them (to help them learn about it).
Set some rules, such as what they have to do to continue getting it, then set some more rules, such as how much you expect them to save and why you won’t bail them out if they spend too much.
Then let them make some mistakes. Don’t bail them out unless it’s serious and they really need help. Give advice, but don’t force it on them. They will learn and it’s best that they learn now, while you are there to help them when they really need it.
It’s better than waiting until they’re on their own and run into some real trouble because they didn’t know how to handle their money.
You may have to do a lot of talking, but remember that the way you act means a lot. If your kids see you going into debt for things that are not necessary, they will do the same.
If they see you saving up for something special, they will learn to do the same. Learning to save and put off a purchase until it can be afforded is a big step toward understanding money.
Earning, spending and saving are all important things to teach about money. Once your child understands the basics of that, he will have the tools to be successful.