The benefits of learning about money at an early age really add up.
By the time your child graduates from high school, she should be able to use a credit card responsibly and know the basics of saving and investing. But don't expect to teach her all this in one crash course. Start laying the groundwork early, and explain the value of money little by little, using these tips from Neale S. Godfrey, author of Money Doesn't Grow on Trees, as guidelines.
- Ages 2-5. Practice identifying different coins with your child to teach her their value. When she understands that she can get things she wants in exchange for money, start her on an allowance -- the weekly dollar amount should equal her age -- and help her decide how to spend and save it.
- Ages 6-11. Help your child figure out the amount of change he should get back from purchases, and teach him to always count his change before leaving a store. In later years, explain what a budget is, and help him set up his own savings account to show him the rewards of interest.
- Ages 12-16. Make sure your child understands the concepts of comparison shopping, and as she gets older, put her in charge of budgeting the expense money you give her (for class trips, movies, clothing and so on). Require her to deposit some in her bank account, and to invest a bit in stocks or mutual funds.--Heather Moors Johnson
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