Teaching your children about money can be challenging. As kids enter middle school, their list of wants seems to spin out of control as they try to keep up with their friends. They need your guidance to teach them practical money skills and financial responsibility. Here’s what you need to know.
  1. Model smart money management. You can’t expect your kids to be disciplined about money if you aren’t. If they see you saving money, they’ll save money. If you spend your money wisely and rarely splurge, they will be likely to follow your example.
  2. Give your children an allowance. For help with allowance decisions, read our EduGuide Choose the Best Allowance for My Child.
  3. Help your kids find a job. Kids as young as ten can start earning money. Encourage them to look for jobs such as babysitting, shoveling snow, mowing lawns, and dog walking. Note: If one of your kids is struggling in school, keep an eye on how the job affects his or her schoolwork: if grades drop, drop the job.
  4. Open a savings account. Banks offer standard savings accounts with similar minimum balances, interest rates, etc., but look for a bank that has a special saving incentive program for kids.
  5. Define financial responsibilities. What do you expect your kids to pay for? Movies, cell phone, clothes? Some of what your children can pay will depend on their income from jobs and allowance, but it’s best to discuss your expectations so your kids understand what is expected.
  6. Make a list of wants and needs. Be sure your children understand the difference between a want and a need. Your kids may want the latest and greatest iPod, but what they may really need is jeans for school. Once you have determined wants and needs together, your kids can sit down with a pen and paper and list items from most to least important.
  7. Set up a spending plan. Our ShortCut “Help My Child Create a Spending Plan”[another link] can help you keep it simple. After a month or two, take a look at how well your kids are following their budgets, and don’t be afraid to tweak the numbers a little if you need to.
  8. Set a limit on purchases. Decide how much money your kids can spend without consulting you first. If you set a limit (ten dollars, twenty dollars, fifty dollars) up front, you can avoid confrontations later on. Be sure to work with your children to create a limit you can both live with.
  9. Encourage bargain shopping. Check out cool consignment shops and clothes swaps, and look online for gently used items.
  10. Talk about cash versus credit. It’s never too soon to discuss how credit cards work. Show your children your credit card statement and explain interest rates, late fees, and minimum payments. Talk about when it is necessary to use a credit card (for emergencies or car rental) and when using a credit card is merely convenient.


Sources:

interest.com
familyeducation.com
moneyandstuff.info