Money Management

Teaching Kids About Money

Teaching kids about money, how to spend it wisely, how to make choices and budget their money, are skills that will last a lifetime. In Part 2 of this video series (Kids and Money was Part 1) we will look teaching your kids how to spend money so they make good choices and they don't end up in debt.

When I was teaching my step daughter how to manage her money, she was about 10 years old.

Teaching Kids About Money She took a percentage of her money and put it in savings, some went to charity, and some went to purchases for herself. She wanted some really expensive pants that I refused to pay that much for.

I told her I would give her the amount that I would pay for those pants, and that she could use her money from her "Purchases" account (or fun money account).

She was so excited as she knew she could spend that money on whatever she wanted. I reminded her that if she spent it on the pants, she wouldn't have it for something else. She thought about it for a minute and decided to buy the pants.

Because she chose to spend the money on those pants, she treasured them and took really good care of them! She really valued those pants and loved them more because she paid for them and chose to spend her own money on them.

She felt proud to wear them. Since then I see her making wise choices in how she spends her money. Yes she may splurge now and then, but when she does she really values what it is she bought.

Teaching Kids About Money and How to Spend it Wisely

Marquertia Cheng shares with you tips on teaching kids about money and how to make smart decisions with spending their money, How to budget and what debt is.

In this video you will learn about Teaching Kids about money and:

Many people these days find themselves in massive debts because their spending habits are way out of control. You don't want your kids to be one of these people. Instead, you want them to be responsible individuals who know how to spend wisely. In this video, Marguerita Cheng offers the following tips on how you can teach your children to be more sensible when it comes to spending money

Let your kids make their own decisions about spending money. You can ask them questions like what do they want to buy, why they want to buy it, and how they could pay for it. With older children, it's a little different. If you have teenagers, make an agreement with them as to how much of the entire cost you will cover and how much they have to shell out. Stick with it. Don't let them sucker you into letting them off the hook if they happen to fail to fulfill their part of of the agreement. This will teach them accountability.

Show them how to use a budget. This allows shows them how their money comes in and goes out. Spend time discussing how they are doing with their budget. Try your best not to give them the impression that they can easily run to you if they mess up their budget. With your younger children, envelopes with different labels like "for spending" and "for saving" will do for a budget. The Internet also has numerous resources regarding money management which you and your children will find useful.

It is also very important for your children to understand the concept of credit, debt, and investing. Explain to them that debt is what they accrue if they keep on spending more than what they can actually afford. Also instill in them the value of investing in their future, whether it is with their studies or their life in general.

Developing the skill of managing money doesn't happen overnight. So it will benefit your children if you start honing their skills early on.

***Note from Melanie: If you are teaching your kids how to spend wisely and budget, they learn best from example. Show them in your daily life how you make wise spending decisions, and how you budget. If you don't manage your money or know how to make a budget, then learn to today, or better yet learn with your kids! YNAB is a great software program to learn with and use to budget.