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Raising Money-Wise Children

Involving your children in money-management discussions and decisions is extremely valuable. Children can be helpful or very challenging when it comes to effectively managing your money. Here are some ways you can instill healthy money-management behaviors in your children:

  • Give children specific roles with regard to daily money management activities. Ideas include opening and sorting the mail or depositing everyone’s change (coins) into the family's “vacation fund” jar each day.

  • Involve children in periodic responsibilities, such as helping to pay bills by writing checks and stuffing envelopes, clipping coupons from the Sunday paper, going into the bank and interacting with the teller, or making decisions and purchases for the family when grocery shopping.

  • Actively engage your children in shopping. For example, let your children carry a fistful of coupons. Let them help you search for the tuna fish that is on special: six cans for the price of three. Make a game of these savings and let your children see your enthusiasm. Your child can hand over the coupons to the cashier and with you look at the receipt to see the results of their shopping adventure.

  • Help children discover that compromises are normal. No one can have everything they could ever want or dream about. The smarter you are about each and every money management decision, the more you’ll have to work with for the things that matter most.

  • Allow your children the opportunity to earn their own money and make their own decisions about what to do with it — with minimal influence on your part. If it isn’t dangerous or illegal — regardless of how practical you think it is — allow them to proceed. This is the best time and place for your children to practice managing their money. Having this kind of responsibility and autonomy — while living under your roof — gives them opportunity to feel the pain of making bad decisions, but they’ll learn valuable lessons about money management while you’re nearby to provide guidance.

Engaging your children in the "joys" of being involved in day-to-day money-management decisions teaches them to work as a team by providing them with responsibilities. As a bonus, you probably will hear fewer pleas for candy or toys because everyone had fun and learned extremely valuable lessons.

Think of ways your children are (or could become more) involved, from earning their own money doing chores around the house to making decisions about spending money.

For example, say that your daughter is turning 10 in a couple of months. This is an occasion for a big birthday bash. Explore all the different, fun things that she’d like to do, while staying within a set budget. You pick the budget amount and let her propose the possibilities she has explored.

Or say that your son wants a car when he turns 16. What options are available to help him to acquire a car and pay for insurance, gasoline, and upkeep? Are you willing and able to contribute financially? If so, to what extent can you transfer some or all of the very grownup responsibility to your son?

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