Kids and money: An important lesson to be learned

It’s common for kids to get an allowance for good grades or doing chores. They may also get gift cards or cash for their birthdays or holidays.

But do parents give kids a green light to spending their money as they wish? Or are there guidelines on how to use that money?

Here are a few things to teach our kids to help them grow up money-savvy:

Money doesn’t grow on trees. Children may think getting money is as easy as going to the machine at the bank (a.k.a. the ATM). By teaching them money doesn’t just come out of a slot, they can learn to appreciate to use it wisely.

Saving is important. Instead of spending every penny they get, teaching kids how to save could be a valuable lesson. By having a savings goal, kids can learn responsibility, perseverance and good spending habits. To make it even more interesting, parents can offer a “match” program for kids to double what they save and help them save for that special purchase. A good example? Saving for a car.

Prioritize, prioritize, prioritize. Learning how to choose what to spend on first is a good lesson for when they grow up. Choosing between spending on an expensive video game may not make as big an impact as saving to attend a special sports camp.

The truth about credit cards. As teens approach 18, they will be getting those pre-approved credit cards in the mail. By explaining to them a few years earlier how credit works, how to use it and the positive side of using cash instead, teens could possibly avoid being one of the millions of Americans in debt. Likewise, leading by example is key. Seeing parents make purchases with money they have instead of using credit, it can change the outlook for our kids’ future.

The power of drive. There’s an entrepreneur in all of us. It’s a matter of putting those ideas into action that differentiates those who succeed and those who may not. By encouraging kids to be creative, innovative, to think outside the box and to get to work, it may light the spark to doing great things in life.

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