Thursday, May 22, 2014

We all want to raise kids who can save money, stick to a budget, and make sound financial decisions. Yet many kids routinely reach adulthood without much personal experience in handling money responsibly.

Financial experts at The Motley Fool, a multi-media financial services company, suggest nine ways to ensure your kids will grow up money-smart:
 

Educate yourself – You can’t teach what you don’t know. Be sure you understand the ins and outs of saving, investing, getting out of debt, and budgeting.

Teach by example – Kids understand more than we think. What message are you sending by busting your own budget to buy that expensive watch you covet?

Help them earn money early on – Whether it’s helping them to set up a lemonade stand or paying them for taking out the trash, help them find ways to earn money of their own.

Cultivate good spending habits – Start with the basics, such as encouraging kids to establish spending goals and save a percentage of their allowance to make them happen.

Reinforce personal responsibility – Teach kids early that nobody cares more about our money than we do ourselves, and that they need to take responsibility for their saving and spending habits.

Teach them to give – Whether it’s raising funds and/or donating for charitable causes, or volunteering in the local community as soon as they are old enough, kids should understand early how a small act of kindness can impact the lives of others.

Discourage consumerism and impulse spending – Help kids understand the lure of advertising and the need to guard against impulse spending. Teach them how to comparison shop and have a ‘cooling off” period before making a big purchase.

Help them distinguish between want and need – Encourage kids to evaluate their spending habits. How much do they need the things they want now? Are they likely to want them 30 days later?

Let them have some money to control - Keep it simple so they don't associate budgets with something that is hard and unpleasant – but do provide enough allowance, or payment for chores, so that they have some funds to control. As they get older, help them budget their money, pay a few bills, and save for their needs and wants. 

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