Teach Your Kids the Importance of Saving Money and Money Management

To quote the line in the old song: Money makes the world go around. So for their future well being, kids should start learning about money at an early age.


Whether you like it or not, your kids are influenced by your attitude to personal budgeting and saving money. Studies have shown that ideas about finance, which kids absorb when growing up, have a profound effect on their behavior regarding money when they become adults.

Although some parents are uncomfortable talking about family budget details with their kids, money should not be a forbidden topic of family conversation. Also remember that psychologists claim more than eighty percent of communication is non-verbal, so the way you handle money on a day to day basis is likely to have as big an effect on children's attitudes as your conversations about the subject.

Giving your child a regular allowance from the age of about five or six is an ideal way to introduce the concept of personal budgeting. You should discuss with your child the types of purchases that their allowance is expected to cover. You should also advise them about the benefits of saving money (perhaps so they can buy more expensive items in future), and ways to make the best use of their limited funds. Visiting a garage sale can be an enjoyable way to introduce a child to the ins and outs of financial transactions, at relatively low cost.

As your child gets older you may want to gradually increase his or her financial responsibilities. A separate clothing allowance, for example, can provide an opportunity for a child or teenager to learn about making choices and thinking about the possible advantages of postponing certain extravagant purchases.

Whichever way you decide to introduce your child to the monetary world, you should always spend sufficient time discussing their ideas about saving money and other financial matters.