Begin Educating Your Children Early About Money

Online, May 23, 2011 (Newswire.com) - Parents teach their children about a lot of things - how to ride a bike, how to write their names, how to be safe - but not enough parents teach their children about how to manage money.

Probably the biggest hurdle in teaching a child about money is knowing when to begin. The easiest time to begin is at about 3 years old. Introduce your child to coins, and begin teaching them the coins' value, encouraging them to save at least some of their coins in a piggy bank.

Remember that It is important, even when they are young, to lead by example. Explain what you are doing and why when you are writing a check, using a credit card or using an ATM card, or when you're paying for groceries. Kids are like little sponges, and they'll learn from your good habits.

Once your child is in school, consider opening a savings account for him. Explain how interest works, and allow your child to deposit some or all of his allowance or gift money into the account, and help him keep an eye on the balance, so he can see his money grow.

When you give your child an allowance, you should also teach him basic budgeting and rationing skills. Play money games that encourage learning, including board and online games, as well as games you and your child can create together.

Don't be afraid to let your child make some mistakes with his money, but don't be quick to bail him out. It's a valuable lesson for a child to learn the consequences of his mistakes, particularly when it comes to money. If he breaks a window, he should be the one to pay to replace it. If he spends money he should be saving for a special outing, then he doesn't go on the outing.

Children should also learn about earning money. Your preteen and teenaged child can work summer jobs like raking, painting, mowing or babysitting.

Once your child begins to understand these concepts, begin to teach him about philanthropy, and help him learn to be a generous giver. It is important for children to be wise stewards of what they receive, as well as what they give away.

Helping your child learn to master some basic financial skills, the big picture of how money should work will start to come together.