How do you teach Children about money?

[RickLee]

My daughter likes to say "pay for it" whenever she sees a cash register. The reason is she knows she can't run outside with a toy because we tell her she has to pay for it. Meaning, it ends up back inside the store shelf.

We do have plans to teach her the importance of Saving, Spending, and Giving. We will have separate containers for each category.

However, I am asking families who have been pleased with their children's money values, how did you teach them?

[TexasNative]

With an 8 week old son, I've already started thinking about this. :-)

I have a bucket of change that I'm gonna deposit to start his first bank account. My bank lets you deposit change with no fee. I'm going to encourage him to deposit his money from chores in there at an early age. I will tell him that someday we will use that account to buy him his first car. I figure if he can see the result of saving up for years and buying a car with cash, this will help him have the discipline to be good with his money going forward.

[Booksalemanager]

There were two methods my parents used that I liked (I will probably want to add more though)

One was birthday money was always put in a savings account/cds. We received some toys as presents but monetary gifts for any holiday or special occasion was put away. This money was given to us when we turned 18 (or in my case 17 for college). It was meant to give us a head start when we became adults. They will hate you when they are 12 and want that money for x item but will thank you when they go off to college and really need it. (I had about 8,000 in it so it paid for a used car + some essentials for college)

The other method was we were not given a set allowance. My parents assigned values to chores (where the total was $10). If we wanted the allowance we had to do the chores and "work" for our money, instead of us feeling entitled to it

[egray]

My parents encouraged us to save money from our birthdays, christmas and so forth. We also had to contribute to larger purchases, such as computers, which taught us how to save....

When I have children of my own, I will most likely do the same

[rickygips]

It is good to know that parents are really after teaching their kids about money matters at a very young age. What my parents used to do was never to give in to my whims on money back when I was young.

[brianna]

Make sure they know the basics first, of course. I remember when I was maybe 8 years old and I wanted to trade my change for bills. I thought only four quarters made a dollar, and when my parents tried to trade any other combination of coins that equal 100 cents for a dollar bill I thought they were ripping me off. I hadn't made the connection yet that a quarter is 25 cents, four of them equal 100 cents, and 100 cents make a dollar no matter what coins you use...

[trustno1]

I waited until she grasped the basic understanding of currency from elementary school. (to avoid confusing her myself, lol).

When I believed she was capable of understanding the concept, the first thing I explained to her was a credit card. She had lots of experience already, watching her mom (my ex) use them! If you do not explain the concept early, little kids "learn from observation to believe it is analogous to "a free money card" to use for everything. (they never see the part where the bill is paid later). It is no surprise to me that credit cards are a problem with teens later...

Anyway, I used age-appropriate language and humorous examples to explain they are for emergency use. If they are used, the bill is always paid off entirely each month.

She learned that you do not buy anything before you save enough money to purchase it. She is now 16 and views a credit card as a stupid alternative to a savings account. She is not interested in having any cards like that!

Worked for me...

The rest of the "money" education is a cake-walk now...lol

[gt0163c]

Also, jokingly refering to the ATM as the "free money machine", probably not a good idea. I also have to remember to be careful with my terms when I'm hanging out with my nephews.

[amyschiff]

It's a shame that personal checks aren't as common nowadays. When my siblings and I would go out with mom, she paid for everything by check. It fairly easy to grasp that checks represented money that you actually have.

Nowadays, debit cards look just like credit cards. It seems like it would be more difficult to teach kids how to distinguish between them.

[FinanciallySMART]

You can find various ways by reading this article. http://blog.financiallysmartonline.com/?p=107