There are many different theories about the best ways to teach children about money. Here are two tactics I found particularly effective with my own children:
Give your kids an allowance
Allowances are a great way to teach children how to handle money. They provide children with financial responsibilities and give them an opportunity to save and spend on their own dime.
I don’t believe allowance should be tied to household chores because children should be expected to do their share of upkeep in the home. The whole family is a team; a parent shouldn’t be a maid! Rather, allowance is additional money that is earned and meant for educational (and recreational) purposes only.
Give kids work
Kids like jobs! Providing children with jobs above and beyond their regular activities makes them feel responsible when they receive money as payment. Teaching your kids the value of working hard to earn money shows them what the real work world is all about.
As kids get older, getting ‘real’ jobs is important since employment not only gives them the benefit of a tangible paycheck, but also the intangible benefits of looking great on their college and career resumes.
To determine if you are successful in teaching your children about money, take an objective look at their spending/saving habits. For reinforcement as to why you as a parent must teach children about money and financial responsibility, click here.
Douglas Goldstein, co-author of Rich As A King: How the Wisdom of Chess Can Make You A Grandmaster of Investing, is an avid chess fan, international investment advisor and Certified Financial Planner (CFP®).
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