What Lessons Are You Teaching Kids About Money?

Did you ever hear that Paul Simon song that talks about remembering all the "garbage" he was taught back in his school days, and how he was surprised he still had the ability to think at all? Can you relate to that? If your children are going to learn important lessons that will really benefit them, they are going to have to learn them from you. What are you teaching kids about money?

Always remember that children do not respond well to the style of parenting that says, "Do as I say, no as I do." For instance, if they grow up seeing you smoke cigarettes, you can talk into you are blue in the face all you want about why they should never start smoking, but it will have no affect. It is almost a given that they will become smokers.

It's the exact same thing when it comes to money. How can you buy frivolous items, or constantly make spontaneous purchases whenever you get the whim, and then expect them to believe you when you tell them how crucial it is to save their money for later?

If you are spending money frivolously on them, that is much worse than doing it for yourself. One of the worst things you can do to your kids is spoil them. Loving parents must get over their desire to do that. Give them the ability to be able to earn money for their hard work around the house.

At some point, the time will come when they want to get something, but they do not have the money saved. This is a fantastic opportunity to teach them the dreaded pitfall of credit card purchasing. Tell them that you will give them a credit card loan for this one item, but the rates and terms are as bad as what new cardholders get.

Allow them to make minimum payment for a number of weeks, so that the money they owe, almost stays the same. See if they decide to pay it down on their own. If not, after a while, tell them you are taking 90% of their allowance to pay off the loan and interest each week, leaving them 10%. That is a way of teaching kids about money that they will never forget.

Derrick Janson is an expert in teach kids money management. He has taught about money matters for kids topics such as allowances, budgeting, saving money and making money for kids.