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Many Children only get to learn about financial freedom and financial responsibility when they first leave home and either get a job or go to college or University. This is too late in life to be learning the ins and outs of the financial world in which we live in. The mistakes they can make at this point in their lives will be much larger with worse consequences than if they had made similar but smaller errors when they were still young and lived within the safety net of the family home.

Quite simply the best way is to give the kids a fixed income when they are young. Let them know they now have the responsibility of paying for all of their everyday expenses. In the United Kingdom the Government gives to every family a monthly allowance for each child. As I approached my teenage years my Mother started distributing to me my proportion of this allowance. With this money I was expected to finance all of my school meals, travel expenses, sweets, drinks, comics, CD's and non school clothing and footwear etc. If I ran out of Money then it was my fault and I had to live with and suffer the consequences such as having to walk everywhere. I was allowed to borrow or take an advance but it would still be subtracted off of the next payment and therefore encouraged me to budget and plan ahead for those more expensive items which needed to be saved for.

In the first weeks of getting all this 'free' cash and financial freedom the kids do go crazy. They will initially waste it on things they don't really need. Within a month or two having made a few errors such as spending all of one months money on the latest sneakers and having to live with the consequences such as having to walk to and from school or not go and see a film with their friends. I actually learnt that if I walked home I saved money which also had the benefit of providing me with valuable exercise too.

I was encouraged to open a savings account and to go once a month when the payment came and to put a portion usually around 25% of the allowance away. When I left home there was sufficient to buy furnishings for my first house.

When I left School I decided to learn a trade rather than stay in full time education. The money wasn't great but what my mother did next was to tax me 33% of whatever I came home with. This 'Tax' was placed in a Savings account which was always available for me to see and along with my own savings accounts the amassed sum was substantial. This 'Tax' also prepared me for all those extra expenses which every homeowner will be well aware.

I feel this worked so well for me that my son now gets the same 'Income' and lives by the same rules.

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