5 Tips for Raising Money Smart Kids

  1. Remember that experience is better than lecturing.  When your kids are ready to learn about money, start letting them make some financial decisions.  It might be as basic as choosing between an ice cream treat and a soda, but let them decide and let them know it’s about deciding what to get, not getting everything they want.
  2. Start younger than you think you should.  Many kids in pre-school can make the ice cream vs soda decision.  Elementary school kids can have an allowance that let’s them buy some things that you used to buy for them.  In late middle school kids can start managing a budget to buy their own clothes.
  3. Lay out boundaries up front.  Let them know what they are not allowed to buy – clothes displaying profanity, dangerous objects like knives, whatever you decide is inappropriate for your family and their age.  Let them know they’re welcome to check with you if they wonder if a purchase is acceptable.  And let them know that if they buy something they shouldn’t, they either have to return the purchase for a refund or give the poor purchase to you for no refund.
  4. Let them be themselves.  They might spend money on things you would never want, but it’s what they want and let’s them start developing their own money personality and skills. 
  5. No bailouts!  If kids make bad choices, express your compassion for the error, ask how they might handle the situation differently in the future, and let them deal with the outcome.  Don’t give them money to recover their loss.  We all learn from our mistakes.  And if you bailout your kids from their financial mishaps, they learn that mistakes aren’t a problem, because you’ll always rescue them.  That’s a very expensive life lesson for them and for you. 
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2 Responses

  1. Linda,

    I love point #5. It’s so important to provide kids with an allowance to learn about the value of money and to LET them make mistakes. Screwing up early might help them avoid potentially disastrous decisions as they get older. Great point!

    John

  2. Linda,
    I was wondering when kids can start “earning” allowances as you mention in #2. And more specifically how much they should earn and for what?
    I don’t want my kids to always think they will earn money for helping out around the house when all the family needs to help – but also don’t want to pay them for every little thing and make up things for them to earn money for.

    Great site and thanks for the advice. Kerry

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