Teaching Kids About Money, Teaches Parents Too


Children inherit physical traits from their parents. But there's something else they inherit that many parents don't consider-their financial behaviors.

Most parents believe that kids should start learning how to manage money before they start kindergarten. But many admit they don't know where to begin or what to teach.

From the moment they're born, kids learn how to live by observing their parents. You can start teaching your kids about money by simply explaining to them what you're doing when you make day-to-day saving and spending decisions. And even when you blow it, don't stop teaching. Let real life give you the opportunity to teach them what to do under those circumstances, too.

$ Never spend it all. Show your children how to save money. Tell them what a retirement account is, how interest works to make money grow. Most importantly, teach them that they never will be broke if they always save for the future.

$ Delay gratification.
Look for opportunities to explain about waiting until you have the money to buy all the things the family would like to have. It's better to save now and pay later. Teach the difference between needs and wants. Children need to understand how making financial sacrifices today can improve their financial situations in the future.

$ Compare prices. The grocery store is a great place to show the kids how you compare unit prices-each product's price per ounce. Show them that just because something is on sale doesn't mean it's the best value. Comparing prices is like getting a second opinion so you can make the best decision.

$ How banks work. Kids think ATMs are magic, so this is a lesson you need to address soon. They see you stick a plastic card in the slot, and out pops money! The underlying truth in all of banking is that you have to deposit more than you withdraw; you only can take out what you've put in. Teach them how a checking account works. Let them catch you in the act of recording the checks you write and reconciling the monthly statement.

$ Debit and credit cards.
Your kids are growing up in a plastic world. It's important that they understand as soon as possible what that means. First, it's easy to create a mountain of debt or blow through the contents of a bank account with a little piece of plastic. More importantly, there's a big world of consumer credit pulling on them to use plastic to live beyond their means. Even if you've made mistakes by using credit cards, you can make that a learning experience for your kids. You don't need to reveal all of the details, but an occasional financial faux pas can provide a great opportunity to humanize money management. Kids benefit from seeing how problems are solved, too.

Talking to your kids often will give you the opportunity to communicate about life's many lessons. Teaching them about money
will be eye-opening and fulfilling, not only for them, but also for you.

Mary Hunt is the founder of www.DebtProofLiving.com and author of 18 books, including her best-selling classic "Debt-Proof Living." You can email her at This email address is being protected from spambots. You need JavaScript enabled to view it., or write to Everyday Cheapskate, P.O. Box 2135, Paramount, CA 90723.

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