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How can I teach my child money management skills?

Michele Borba
Psychology

Here are tips from The Big Book of Parenting Solutions: 101 Answers to Your Everyday Challenges and Wildest Worries to help teach your child learn good money management habits now, to give him a more financially secure future later.

Be a good role model. If you always are overdrawn, why expect your son or daughter to set a budget? If you buy clothes impulsively why should you expect your daughter to wait for the sale? If you don’t talk about the value of money, don’t think your child is ever going to learn that money doesn’t grow on trees. So be the model of money management you want your kids to copy. They are watching.

Use real-life examples. Take your child to work. Show your daughter how you balance your checkbook. Talk to your son how your credit rating is checked before purchasing that car. Show your kids the household bills so they know how much electricity, gas, water, phone and cable cost. You don’t need to reveal your income or savings but you should use real opportunities to help your child understand money.

Give an allowance. One of the best ways for kids to learn to manage money and keep a budget is by giving allowances. How much to give depends on your child’s spending habits and maturity, and your comfort level. But the keys to allowance success are these: Set a certain amount. Explain to your child what the allowance will cover (such as school lunches, movie tickets, makeup, and birthday gifts for friends or just nonessentials). Pay regularly at the same time and amount each week. And don’t bail them out!

Encourage savings. Most kids are impulsive and want to spend, spend, spend. Our job is to teach them to save, save, save. So help kids fight their spending urges and learn how. For instance: Make a rule that a portion of his allowance goes to a charity his choice. Or the piggy bank must be filled or weigh a certain amount before money is spent. Or open a saving account for an older child where she can monitor her money just as in the real world.

The Big Book of Parenting Solutions: 101 Answers to Your Everyday Challenges and Wildest Worries

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The Big Book of Parenting Solutions: 101 Answers to Your Everyday Challenges and Wildest Worries

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Important: This content reflects information from various individuals and organizations and may offer alternative or opposing points of view. It should not be used for medical advice, diagnosis or treatment. As always, you should consult with your healthcare provider about your specific health needs.