Teaching kids about money can help them avoid major money mistakes. Personal finance isn’t a subject typically taught in school, so your kids may need your help learning about money management. Graduating school with a solid understanding of personal finance can give your kids a leg up and help them avoid major money mistakes.

Here are some tips for teaching kids about money and helping set them up for financial independence.

1. Help them learn the value of money.

Teaching kids about money starts with helping them to understand the value of a dollar. By allowing your child to earn an allowance, they can begin to learn the value of money and how to make financial choices for themselves. Many children discover that they make different choices with the money they earn versus spending someone else’s money.

2. Teach the importance of saving.

Eventually, your child is going to want to buy something that exceeds their allowance. Encourage them to save up for those items to teach them the concept of delayed gratification. To show them how to save, you can use a jar or piggy bank and set aside a portion of the money they receive. Help them keep track of how much they have and how close they are to reaching their goal.

3. Encourage them to work.

When your child is old enough, encourage them to take on a part-time or summer job. Working can give them purpose and prepare them for their careers. Make sure they set aside a portion of their paycheck in a savings account.

4. Give them financial responsibilities.

To help your child learn budgeting and money management, give them financial responsibilities. If they work, they can cover expenses like their gas or entertainment costs.

5. Help them build credit responsibly.

When they’re ready, you can help your child build credit by adding them as an authorized user to your credit card. Make sure they understand their spending limit, show them how to keep track of their spending, and how to make payments.

Summary

Teaching kids about money can set them up for financial success. Start by allowing them to earn an allowance and showing them how to save. Encourage your teenagers to get a job and give them financial responsibilities. Add them as an authorized user of your credit card to help them understand credit and build a credit history.

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