by Bob Schmidt

Created on: April 17, 2009   Last Updated: April 23, 2009

Teaching young children to be money smart can be fun, and lay the foundation for future success with money matters. All parents would be wise to consider ways to effectively teach their children how to manage, budget, and save money. Lessons learned as children are usually not forgotten. What a valuable tool money smarts can be to any child's future.

Being money smart is impossible until a child has control of some amount of money. In order to learn the lessons of how to make good decisions with money, establish a small allowance for your child to manage on a weekly basis. Make sure that the amount of money involved is not excessive so that real decisions will have to be made on how to budget this valued income.

Once they have a small budget, help your child understand the limitations of how the money may be spent. If the allowance is a weekly event, make sure that the child understands that once their money has been spent, they must wait until the next allowance to have additional funds.

When a child realizes that they are in control of their allowance, several important lessons can be learned. If they spend their money unwisely on instant gratification things, they can learn the advantage of saving for something that is important to them. By learning the true value of money, they can learn the basics of making good money decisions.

The thrill of saving their money for something special is not lost on a child. Parental guidance is usually appreciated by children because they enjoy pleasing their parents. Parents should never forget how adaptable children are. Once they understand what is expected of them, their desire to please their parents is undeniable.

In addition to allowances, small jobs that permit children to earn their own money are another way to achieve the same result. Besides reinforcing the concept of earning money, being able to decide how to spend that money is important to their maturation. As opposed to controlling their spending decisions, it is important to be advisors to our children. Every child learns about values from someone. Ideally, that should be from a parent.

Teaching children the skills needed for success in their adult lives is a parent's primary responsibility. It is part of nurturing them to adulthood. Obviously, children learn a great deal from their parents by imitating the behavior demonstrated on a daily basis. Besides being a good role model, using a few tools to specifically teach skills such as money smarts is good parenting.

The alternative is that someone else teaches your child their values. That cannot fall into the category of being desirable. Taking the time to teach our children is one of the most basic parts of parenting. It is the means by which we carry on family traditions, and assure our own immortality.

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