1. Pay bills with your kids watching. Monkey see might not always equal monkey do as much as you’d like with your children, but kids do follow examples they witness. Show them how you pay a bill manually as well as electronically via the Internet. Score bonus points by having them double check your math or the math on your statements. They’ll learn the basic process for payment and see it’s important enough to put into a regular schedule.
2. Get serious about wants versus needs. Having wants isn’t evil, but needs come first. Have your kids make a list of what they consider true needs, as well as a list of things they’d simply like to have or do. Then work with them to prioritize each list. Talk about why each item is given a certain priority and how to meet their goals. For example, you can teach kids to save as a method of getting something on their list.
3. Whip out sale papers and coupons. Having your child scour sales ads, coupons and unit pricing labels will show him who really has the best bargain and teach him how business competition works. Take him with you while you shop and have him add up costs as you go. Stress staying within budget.
4. Give an allowance—then tax it. An allowance is a great tool for giving kids some control over spending and letting them make some simple money mistakes. Even so, in real life, people can’t keep everything they earn. Charge your child tax on the allowance you give so he learns about withholding, the government tax system and what taxes support.
5. Encourage and match savings. Savings is critical to making retirement work, meeting basic needs in emergencies and staying out of debt. When you give an allowance, give it in small denominations so your child can immediately designate a portion of it to savings. Matching kids’ savings provides incentive not to spend everything and introduces the concept of employer or government matching, such as with pension plans or IRAs.
6. Play money up. Let’s face it. No kid wants to be serious all the time. That said, play can be a tool for teaching serious concepts. Use methods such as playing store, making Playdoh money or doing money-related puppet shows are all fun ways to provide money education for children.
7. Extend some credit. In today’s world, few people have enough resources to treat credit like bad cheese. Many children don’t understand debt issues because they don’t truly understand that credit isn’t free money. When your child wants something that’s a little pricier, instead of having them save for it every time, consider giving them a loan, complete with interest. This will introduce them to the way real creditors work and teach them to take out debt responsibly with a plan.
8. Make your kids your budget checkers. Often, when a budget fails, it’s because people don’t stick to the good plan they made. Make your child a regular contributor to the budget process. Have her double check your math and talk about ways to reallocate funds. Make it their responsibility to keep track of receipts and help them document both spending and income.
9. Enforce the sleep-on-it rule. Impulse spending is one of the biggest problems people have with money; it consistently throws off well-planned budgets. Have your child wait at least 24 hours before she makes her purchase. This will teach her not to be swayed immediately by marketing and emotional response, and it will lower instances of buyer’s remorse.
10. Introduce investing. Kids typically come to understand that people work for money because they see their parents go to jobs. The idea that money can work for them is a much different concept. Introduce investing with simple options such as savings bonds, moving on to more complex options such as stocks later. If you want, you can do everything on paper so your kid doesn’t truly lose money, but losing a few bucks can make a bigger impression.