How to teach Your kids about money

Kids need adults to teach them many things in life, and that includes how to be smart with saving and spending. “Children as young as three can understand basic money concepts like value, exchange and choice,” says personal finance expert and Make Your Kid a Money Genius (even if you’re not) author Beth Kobliner. Here are some of her tips on how to raise a financially savvy kid.

Curb your kids’ demands. "Children who are told 'yes' all of the time have difficulty handling delayed gratification," says Kobliner. Explain why they have to wait for that swing set or birthday present, and let them know "when you really want something, you save up for it,” she says.

Give 'em cash. In her research, Kobliner found that young children often don't understand the value of a dollar because many parents use plastic. “The next time your middle schooler goes to the mall with friends, give cash to teach the basics of budgeting,” she says.

Show how work translates into money. “The whole idea of work—that you go and perform a task daily in exchange for money to buy things—is something that is completely lost on a child,” says Kobliner.  So, take your kids to your workplace and describe what you do, she says.  Then, explain how your employer deposits pay into a bank checking account, and how a debit card can be used to withdraw that money.

Explain that ads are designed to sell products. The next time your child gets excited about a new toy after seeing an ad for it, explain that those TV commercials and online advertisements "are made to make something see much cooler that it often is,” says Kobliner.

-- Tanisha A. Sykes

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