by Das Govind

Created on: April 18, 2009

Children learn to budget from their parents. Parents have the responsibility to teach their little ones the ins and outs of successful financial planning. Money is something that if not spent wisely or used irresponsibly will have disastrous effects long term. Children generally observe the spending habits of the parents and unconsciously pick up the bad and good habits once they grow older. Parents who are irresponsible with money ultimately raise children who will be the same.

Here are a few tips in order to create children who are money smart:

1. The common theory children have about spending money will depend on their personality, but it is up to the parents to instill an attitude in the child where they are very money conscious. Parents need to sit down with children as a family, or even have family days out, be it ot the movies, shopping or just going to the local supermarket where parents teach children the importance of budgeting, and also sticking to lists whilst doing grocery shopping. Parents also need to take children to theme parks and movies, and make the children aware about the cost of tickets, if food in these places cost more parents should explain the reason for bringing own lunches also, i.e if a movie theatre canteen is selling popcorn for ten dollars, and if a restaurant or fast food place is selling a good meal for twenty dollars for a family of four, it would be the wiser idea for the family to eat before the movie, so that the children do not feel for popcorn during the movie. Also children need to be aware of special offers and coupons in supermarkets. Children can play a huge part in helping with the shopping and paying of bills and learn from it.

2. Parents should let children open bank accounts and make children aware of saving, bank charges, interest rates for savers. Parents should also give out an allowance for children, every month, and this will teach children to budget. If the child goes over the budget., parents need to exercise tough love and not give in to giving the child more money. Children who have extra money at the end of the month can save it, and parents can explain to children the importance of good saving and also money earned from interest, for example if the bank is giving a 5% interest rate for savings and children have about a 100 dollars in the saving account then they will make five dollars of interest for the year.

3. Parents should encourage children to get part time or school holiday jobs, whether it is packing goods in a grocery store or helping out neighbours with the chores, and children should be made to buy items that they need or want, for example like a bicycle. The child also has a better chance of using the item and taking care of it, knowing that they worked hard for it.

Following these tips parents will raise adults who are smart about money, and may even be millionaires by the time that they are forty.

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