Wealth of Knowledge: Teach Your Kids About Money
Get Savvy About Savings
When your teen does start earning, teach him to funnel at least 10 percent of every paycheck automatically into his savings account. You can even start your own version of a 401(k) plan: Let him know that you'll match each dollar he saves with a dollar of your own (or whatever amount you can afford). He'll soon learn that the more he saves, the quicker his money adds up. Or go old school: Even stashing coins in a piggy bank will help him see that spare change adds up to real cash. If your tween or teen has plans for a new laptop or a gaming system, help him learn how to save for that big goal now. Teach him to calculate how much he has to save every month to pay for the purchase -- it'll be eye-opening.Learn to Spend Wisely
When a big family purchase is looming, head to sites like Amazon or Epinions to read reviews and check online prices. Showing kids how to get the best value will carry over to their own spending decisions, whether it's for new jeans or an MP3 player. It's also important to demonstrate wants versus needs. It seems so simple, but how many adults do you know who are living beyond their means and carrying tons of debt? A new water heater is way less exciting than a week at Disney, but showing your kids that you have to make tough decisions (and involving them in those choices) will help them learn this crucial lesson now. And if your child has already had a money mishap, don't get angry. Walk her through the steps she can take to rectify it.Do Some Extra Credit
After your kids have the basics down, tackle advanced concepts like budgets, credit, and investing. Use real-life examples when you can: Show them your actual family budget or pull out Monopoly money to give visuals on how credit card debt can get out of control and how interest really adds up. Make it fun and hands-on to keep them from zoning out. Play games like Charge Large (a board game where the goal is to end up with no debt), start a simple family business like selling garage-sale finds on eBay, or bring savings to life by adding up how much you save when you make burgers together at home instead of eating out.
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