4 Secrets to Raising Money Smart Kids That Every Parent Should Know

You’ve taught your kids not to talk to strangers and not to give out personal information online. You do your best to protect them and keep them safe. You provide educational material and expose them to learning opportunities. But have you taught your kids the value of a dollar? What your kids don’t know about money can hurt them and their credit rating when they’re adults.

Some children are naturally good with money; they instinctively save and don’t fritter it away on frivolous purchases. Other children, being impulsive as kids often are, don’t save – they want the latest toys, video games, cool shoes…and they want it now. It’s no surprise they’re impatient. Adults are often the same way. Fortunately, children are too young to have charge cards or they may rack up huge bills like so many of their parents have done.

There are some secrets to raising money smart kids that you should know.

1. Show them how to save. Vaguely, I recall my parents telling me to save, but I don’t ever remember them telling me how. For a lot of people – not just kids – it’s not enough to say “save.” They (and I) need to be shown specific ways to do just that. If you give them an allowance, you need to sit down and have a conversation about what they do with their allowance money. I know some parents think that their kids should learn these lessons the hard way, but isn’t parenting about providing guidance? Explain to your child that this amount should be put away for saving and this amount can be spent. Give them a blank check register and show them how to record money going in and money going out.

2. Don’t buy them everything they want. There’s want and there’s need and there’s a big difference between the two. When kids grow up seeing their parents charge everything, they begin to think buying things is easy. Children don’t pay attention to the bills you get in the mail afterwards – all they know is that Mom bought a new purse or Dad bought a new iPhone. Learning to control your own spending impulses will teach your kids that sometimes, you can forego a new, oftentimes unnecessary purchase. They won’t like it, but this is one hard lesson that will benefit them in the long run.

3. Make them earn it. When your son asks for the latest video game, do you jump in the car and head straight for Game Stop and buy it? Or do you ask him how much it is, if he has any allowance money of his own and how much more he needs before he can buy the game himself? If children get everything they ask for, they see their parents as endless supplies of cash flow; who cares how the cash gets there? Your kid certainly doesn’t. Instead of making it easy, make them earn their own money if they don’t have enough allowance money to buy what they want (not need). I’m not one of those parents who believe kids should be paid for chores like cleaning their own rooms, but they should be allowed to earn a little extra by doing tasks that aren’t normally assigned to them (weeding the garden, washing cars, etc).

4. Send them to camp; money camp, that is. This idea has sprung up recently and while there’s debate on how much fun it is for the kids, it is a smart idea. Apparently, you send your child to a summer camp where they learn about money: investing, saving, leadership, all taught by certified financial planners. There are different camps around the country, but it’s worth looking into if you really want your kids to get solid lessons that they can carry with them. At least they won’t come home with a poison ivy rash.