Teaching kids about money management and growth is an important skill for future success in life. Parents often struggle with the best way to teach these skills, particularly since so many adults seem to have difficulty with growing money themselves. Here are a few tips on how to effectively teach kids about growing money so that they can increase their possibility of financial success later in life.

Model behavior

One of the most effective methods for teaching kids about growing money is to model behavior through regular investing and proper budgeting. It can be somewhat touchy to share all the details of your family budget with your children, but letting them know aspects of your financial habits can show kids that your actions match your words. This will give credence to your teachings if you give your kids instruction regarding money growth.

Set up a fund

Another great way to teach kids about growing money is to set up a fund that you can manage with them. Oftentimes parents will set up a savings account for their children at the local bank. This is fine, but the returns on these accounts can be rather poor. The benefit to working with a local bank is that kids get the opportunity to visit a bank, get a checkbook, and perhaps get in the habit of making deposits. Another option is to set up an on-line money market account, which typically offers better returns and can orient kids to doing finances on-line. This can be beneficial since on-line money management is becoming much more common.

Have goals

Teaching skills and concepts are often helped by goals and visual aids. Ideally you might work towards a goal of college but this may be too far off in the future to be effective for a child, though it is important to emphasize anyway. A more tangible short-term item may help motivate a child and give them a stronger sense of how much they need to save in order to afford their item. As some children have ambitions for "big-ticket" items, the realization of the cost of these items may be a profound lesson. To track savings, it may be effective to use a chart on the wall to give a visual reminder of progress. This allows the child to have a sense of how far allowance or other earned money is going towards their goal.

Teaching kids about growing money is typically most effective with a multifaceted approach that incorporates concepts, hands-on learning, and consistent reinforcement. While these tips won't guarantee that kids will grow up to be solid money managers, it may give them skills that will allow them to make smarter decisions as they grow older.

Learn more about this author, Todd Pheifer.
Click here to send author comments or questions.

---

Add your voice

Know something about Ways to teach kids about growing money?
We want to hear your view. Write now!