Teaching your kids the value of money

July 16, 2010 4:51:30 PM PDT
Kids and allowances. How much? How can they earn it? Steps to help your child become savvy about money.

How to teach kids about money tips:

  • Use SmartyPig (an online piggy bank that allows users to set up specific savings goals and offers a competitive interest rate) as a tool to teach kids about savings and compound interest by setting up a savings account for them

  • Give allowances that encourage savings e.g., giving kids five $1 bills instead of a $5 bill, so they can visual put aside some of their money.

  • Allow kids to make their own spending decisions, even if it means letting them make mistakes. This way, they'll learn how to weigh the pros and cons & use common sense before spending money.

  • Teach them to set financial goals (e.g., new video game or clothes) and explain how much they would need to earn and save in order to reach their goals.

  • Encourage kids to earn money themselves, whether it's getting a summer job or becoming entrepreneurs.

  • Depending on the child's age, let them "help out" with paying bills e.g., writing out the checks or showing them the bills. This way, they'll get a better idea about what it takes to live.

  • Rather then covering all of their expenses e.g., cell phone bills, set boundaries by having your kids pay for their share of the bill or any extra charges that come up e.g., too many text messages or minutes used.
About Aaron Crowe:

Aaron writes and edits for WalletPop, a personal finance website run by AOL and covers a variety of topics including technology, career and children's finances.

He also writes for other AOL sites including Housing Watch, Rented Spaces and a job finding website.

Previously, he was the assistant metro editor at the Contra Costa Times in Walnut Creek, CA before being laid off in June 2008. As an underemployed stay-at-home dad, he also takes care of his 5-year-old daughter.

For more information, visit www.housingwatch.com


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