Teach kids about money management starting the day they learn to count change. When children complete chores to receive an allowance, they value their hard-earned income. Extra chores can be offered as a plan for earning additional cash. Help children develop a budget, dividing their funds between spending, savings, and charity or tithing. Give five dollars plus five one dollar bills for a ten dollar allowance to make the dividing easy.
Help kids develop a plan to purchase an item they can’t yet afford. Don’t hand out extra cash. The plan could involve saving, earning extra cash, or use of a family credit card, permitting your child to buy with credit and pay back with regular payments. Let children make and regret impulse spending decisions. Wishing they hadn’t made a purchase produces a more cautious attitude for future spending decisions.
Encourage saving by offering matching funds for funds deposited in a savings account. Many 401(k)s do this so this is a real world lesson that encourages delayed gratification. After saving for awhile, children can buy stocks, one stock at a time, through discount online brokerage sites. They should watch the market and the value of their stock rise and fall so they understand the risk.
Teenagers can improve their budgeting skills with a youth checking account and debit card, available at many banks. Presenting a debit card with insufficient funds is embarrassing, so they’ll want to balance their account.
Before teens enter the labor market, discuss the necessity of balancing work with school, home, rest and play. Explain taxes and encourage a budget so they start work with a plan to manage their new income.
When you teach kids about money they are prepared for self-sufficiency. They learn the value of money be earning their income, budgeting, and setting goals. Better they make poor financial decisions while young, than as young adults with rent and bills to pay.