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Teaching Kids about Money: A Guide for Parents

Teaching kids about money is one of the most important roles of parents during the childhood years. Kids who learn about the value of money and the importance of saving will become financially responsible adults who save and spend wisely when they grow up. It is important for parents to make financial education a family priority by teaching kids the value of saving, budgeting and investing starting from an early age. Here are six ways for parents to start teaching kids about money and cultivating a positive attitude towards saving.

Teaching Kids about Money

ONE | Teach Children How to Save

Give each child a clear piggy bank or a jar and ask them to start saving money in them for a future toy or game. This will give children a motivation to save. You can provide them coins and some small change occasionally to put in their money jars. You want your child to develop a habit of saving money regularly from an early age and be able to see how money grows over time.

TWO | Teach Children about Coins and Bills

Teach your kids about bills, coins and their denominations as soon as they are able to understand the numbers and the counting sequence. Show them different dolor bills and coins and have them memorize their values. You don’t need to confuse your child with complicated addition and subtraction. You just want them to understand a $10 bill is worth more than a $5 bill, and a $5 bill is worth more than a $1 bill.

THREE | Let Children Pay Cash

Children need to understand things cost money. When you go to grocery store to shop for small items, let your kids pay at the register with cash. This way they will learn how much each bill is literally worth. They will understand the meaning of buying and that you receive things by exchanging them with money.

FOUR | Let Children Manage their Allowance

Give children a weekly allowance and have them manage their own money themselves. Managing their own allowance teaches children important financial skills as well as financial responsibility. Occasionally check with them on how they spend their money. Let kids have control and make mistakes but guide them along the way.

FIVE | Open a Saving Account

Open a saving account for each child at a very early age. Let children know you are saving money for their future. If children receive cash as a gift, ask them if they want to contribute a portion of it to their own saving account. Explain to kids why you are saving money in a bank account and why saving money is important for their future.

SIX | Let Children Know Money is Earned

Explain to your child that mom and dad work really hard to bring money home. Teach kids that money is not a free commodity. If your child wants you to buy him a remote control car for $20, ask them to save $5 a week, so they can get what they want after saving for four weeks. You can still provide your child the $5 contribution each week and have him to save it in his money jar for the future purchase.