Four important money lessons to teach children

August 11th, 2009 by Aaron Smith

Piggy Bank

Teaching your children about money and money management is vital to their ability to make it on their own when they grow up, and it can also help you keep yourself honest in your own money management. There are four ways to teach children about money and investing that serve as a great starting point to helping them understand the basics.

Four ways to teach children about money

Use the good old piggy bank- While we understand that in the grand scheme of things piggy banks don’t often hold a lot of money, they sure can do a lot to helping learn important lessons about saving up money. Give your children a piggy bank and have put any spare change in there. Have fun counting up the amount in the piggy bank with them to give them an extra lesson on money.
Give them an allowance- It is wise to give your children a small allowance for doing chores around the house or whatever you need them to do, so that the children can learn how to use their own money. If they are simply using your money to buy what they want they’ll never learn the importance of making tough decisions on what to buy and what not to buy.
Help them understand that sometimes the answer is no- Let’s face it, we can’t always have what we want, and your children need to learn that early on. Understanding the meaning of the word no is important when teaching about money management.
Set up a savings account at a local bank- By setting up a savings account at a local bank for your children you will allow them to see how investing money in something as simple as a savings account or even a certificate of deposit can bring them extra money. Show your children how much they have made from this account, since they will almost certainly be excited to get extra money.

While all of these lessons on managing money for children are important, none of them will work if you don’t practice what you preach. Your child will always watch you for guidance, so make sure you are managing your money well or your children will be off to a bad start right away.