In the days before credit cards and Internet shopping, life lessons about finances were simple. As long as kids learned that money didn't grow on trees and that you usually got what you paid for, they had the financial knowledge they needed to survive. Unfortunately, today's kids think using a credit card is the same as getting something for free, and that as long as they have checks in their checkbooks, they still have money in their bank account. To help your children become financially savvy these days, you need to teach them not only basic banking principles but business practices as well.
Practice what you preach. If you don't set a good example for your kids when it comes to managing your own money, you'll have no credibility when trying to teach them to become financially responsible.
Show your child how much things cost when you shop by letting them count out the money to pay for the items. This will help them begin to equate the value of money to tangible items.
Open a bank account for your children to begin saving money. Let them fill out their own deposit slips, deal with the tellers and decide whether to take advantage of promotions the bank offers young customers. Performing traditional banking activities rather than doing it online will help them become more savvy in their banking practices.
Make your kids earn an allowance; don't just pay them for no reason. An employer won't pay workers if they don't do their job so parents shouldn't either. Developing a strong work ethic as a child will be very beneficial later in life as these kids make their way to becoming financially independent.
Encourage kids to start their own small business. There's no better way to become financially savvy then managing your own income and expenses. Whether its mowing lawns, delivering newspapers or pet sitting, it's all about money coming in and money going out.
Allow your teenager to get a credit card with a low spending limit and require them to pay the balance off each month. If they charge too much and have to carry the balance over, they'll get a quick lesson in how finance charges and late fees work.
Tips & Warnings
Children who don't develop savvy financial skills will ultimately grow into adults who are poor money managers.
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