Teaching kids about money is about more than just making sure they can balance a checkbook when they get older. With credit cards being offered to kids as early as high school, student loan debt on the rise and more adult children living off their parents than ever before, it's crucial to make sure that our children get a solid financial education. Get started on these three tasks and you'll build the foundation you need to raise money-savvy kids.

  1. Start giving your child an allowance. (Or if you're already giving an allowance, review your approach to make sure you're getting the most mileage out of this important tool.)

    Once kids have money of their own, they can begin to learn how to handle it. And you can stop paying for candy bars and DVDs. Many parents start with $1 a week in kindergarten and go up by $1 a year through elementary school. For older kids, one of the best ways to determine how much to give them is to decide what the money is supposed to cover. If you want your teen to pay for school lunches, weekend outings and videos out of their allowance, you should make up a budget with them that includes those expenses and come up with a fair number.

    Most experts recommend parents do not tie allowance to chores. Helping around the house should be your child's responsibility simply because they live in the house, not because they're getting paid to do it. You'll also avoid any arguments if your child decides they'd rather forgo the money than do the chores.

    That said, for special purchases that an allowance simply won't cover, it is a good idea to pay your child for big jobs you might normally pay someone else to do, such as mowing the lawn, cleaning the garage and shoveling the sidewalk.

    And keep in mind, your child's money is theirs to spend as they please. It's fine to insist that they save part of it and give part of it to charity, as many families do, but if your daughter wants to blow her spending money on a really ugly skirt, you've simply got to live with it and let her make her own decisions.

    Debating about how much to give? Figure it out on this allowance calculator!

  1. Get to the bank!
    Many banks still have low-minimum passbook savings accounts that are perfect for kids. Once your child's piggy bank is stuffed, take them to the nearest branch and help them fill out the paperwork to open an account. Then encourage them to deposit birthday money and other windfalls so they can watch their balance grow.

    With older kids, you can extend this lesson into stocks. Start tracking stocks you think your kids will be interested in (Disney, McDonalds, etc.) in the paper each day. You'll be surprised how fast your child picks up the basic concepts of the market. When they're ready, buy a few shares of the stocks they've been following in a custodial account at an online trading firm. Give your child the password so he or she can follow the portfolio regularly and make suggestions for what to buy next and when to sell.

    Find out how quickly your child's savings can add up.

  1. Encourage work.
    All your lessons will really kick in when your children start earning their own money. Additionally, working in high school and college—to the extent that it doesn't interfere with schoolwork—seems to pay off later in life. According to a Roper study, people who worked in high school are more likely to achieve their financial goals and be knowledgeable about money than those who did not.

    How can you encourage your kids to get a job? Give them money only for the bare necessities and insist they earn the rest. Then help them with their job hunt—having them put the word out to friends and family that they are available and checking the local bulletin boards and newspapers for teen-appropriate positions. Be available to help them get where they need to be on time. And don't sabotage their ability to work by requiring them to do certain chores, such as babysitting younger siblings, unless you're prepared to pay them for those hours yourself.

    Learn how to help your children find jobs.
Please note: This is general information and is not intended to be legal advice. You should consult with your own financial advisor before making any major financial decisions, including investments or changes to your portfolio, and a qualified legal professional before executing any legal documents or taking any legal action. Harpo Productions, Inc., OWN: Oprah Winfrey Network, Discovery Communications LLC and their affiliated companies and entities are not responsible for any losses, damages or claims that may result from your financial or legal decisions.


Next Story