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What are some basic tips that I could use to teach my kids good money management?

Children will be curious about how much money you make. Instead of discussing specific dollar amounts, use the opportunities when they are thinking about money to discuss how people earn income and to talk about some good behaviors like saving and having a financial plan.

If possible, provide an allowance for your child. (See Children and Allowances for more information.) With some direction from you, an allowance can be one of the greatest financial teaching tools for your children. They will learn to plan and take responsibility for their purchasing decisions.

Sit down with your child and help them decide how they will spend their allowance or any other money they may have. Teach them to set aside a certain amount for savings. Also, provide a little notebook where they can note everything they buy to learn to track their spending. Talk with them about their goals and for what they would like to use their money.

It is difficult for children to understand how checks and credit cards work. They see you pull out your plastic card, sign your name and then take your purchases home. Many children do not understand that later a bill comes to you. Explain the process of credit and how it works. Perhaps one child could loan money to another sibling (charging a small amount of interest) in order to better learn about how credit works.

Finally, practice good money management yourself. Your child's best teacher is your behavior. It doesn't matter what you say if you do something else. Display good financial behavior and your children will copy it.

For additional information, see a website developed by the Center for Entrepreneurship and Economic Education at the University of Missouri-St. Louis.


Mary Anne B. Pettit, Center for Economic Education, Southern Illinois University-Edwardsville












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Last update: Friday, July 25, 2008




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