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Teaching Kids about Money

By Marc Courtiol

While many parents often mention the fact that they wish they had learned more at an early age about how to handle money, many of them are surprisingly hesitant to discuss such matters with their own children. This seems a bit odd, since so many of us wish that our children had a better grasp of the reality that money does not grow on trees; nor is it available in an endless supply for the majority of us.

Talk to your kids

If you want your children to understand how valuable money really is, you need to talk to them about it. Children are not going to understand anything about money and what things really cost if you do not make an effort to teach them. For parents who grow weary of hearing their children whine about wanting this or that all the time, it would seem to be a simple enough thing to do.

To demonstrate the cold, hard facts about money, show them where the money goes. Of course, for this to be effective you need to wait until your children are old enough to understand. Trying to explain finances to a toddler is just not going to do you any good. Once your children are old enough to be able to grasp the basics, sit them down for a chat about money.

If you write down what you earn and list the immediate deductions that are taken out of that such as taxes, 401k contributions, and insurance premiums, they will be able to see what is left. You should also show them what you pay each month for bills. Once they see what is left over after all of that, they will be far more likely to at least have a general comprehension of why you cannot afford to buy them whatever they want.

Make them stick to budgets

One of the best things you can do for your children is start them out early with learning how to live on a budget. Give your kids an allowance every week, but do not just let them blow it on whatever they want. It is a good idea to have them put a dollar or two back to save for college, expensive toys they want, or clothing.

It makes sense when you really think about it. If you always buy things for your kids without ever letting them handle or deal with money, they are probably going to grow up without any realistic concept of just how much it takes to survive in the world.

If parents allow their children to take a more active role in handling money, they will naturally develop a greater appreciation for the true value of it. Without establishing some solid, realistic guidelines for your kids when they are young, they will be much more likely to grow up thinking that they can spend money recklessly without having to worry about the long-term consequences of overspending. If you teach your kids the facts about handling money, they will probably be much more responsible with finances as adults.

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