Teaching Your Kids to Save Money

Nov 07, 09 Teaching Your Kids to Save Money
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Many teens do not have an adequate understanding of the value of earning and spending money.  They were not properly taught the importance of saving and investing.  Even at an early age, there are crucial lessons that they should learn that would prepare them for adulthood.  Parents and guardians still have a great amount of influence and play a vital role in imparting these values to children.

Teach your kids how to save money now.  They need to learn about the concept of money and the value of smart investing as early as possible.  This will prepare them for  money management, a skill that will grow in usefulness as the economy continues to decline.

Here are some tips on how you can teach your children about financial management:

1. A child’s money education should begin as soon as they learn how to count.  Begin with simple lessons and explain money as a medium of exchange.  Make sure that they understand these fundamental tenets before moving onto something more complicated.

2. Clearly explain to them the value of saving money.  Make them understand its importance and how it affects their life.  Let them know the consequences of poor financial management and the difficulty they may have in life if they squander their finances.

3. If you choose to provide an allowance, give it to them in different denominations.  This allows them the opportunity to manage their own money, create savings accounts, and plan for future purchases.  This provides practical, real-world opportunities for them to exercise their knowledge.

4. Reinforce the value of working for money.  Create escalating scales of achievement and pay according to that scale.  If they mow the lawn, they get a certain amount of money.  If they mow, edge, and trim they get more.  This will give children an idea of how labor is rewarded in the adult workplace.  By working hard for their money, they will come to appreciate the money that they have earned.

The value of money and the importance of saving and investing are self-evident lessons.  These are invaluable life lessons that should be taught with patience and care.  Providing guidance that is born of your own personal experiences is the best teacher.  Never be afraid to admit that you do not know something.  Learn it and teach it to your kids.  These lessons may prove to be mutually beneficial for both of you.

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