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Tips on teaching kids the value of money

September 8, 2009 5:14:52 AM PDT
Most of us love it and want it, but not everyone knows how to use it. Money matters, maybe more than ever these days, and that has some parents wondering about the best way to teach their kids.

"I grew up with not much money, so I'm trying to show her the cost of money, especially with today's economy" said parent Lizette Schley.

Parent Ramon Martinez said his father taught him the importance of making a dollar, and he's passing that on to his child now.

Parent Daisy Hiliry said she wants to start early.

"I think it is important to start when they start in preschool," she said.

When to begin often depends on the child.

Janet Bodnar, the editor of Kiplinger's Personal Finance, believes the first grade is a good time to start.

"Because they are learning about money in school, they know that 10 dimes equals four quarters equals $1. They have a more sophisticated idea of how far five bucks will go" Bodner said.

Explain things in simple terms. Let them handle small amounts of change. Kids love coins, and vending machines are another great way to teach young kids about money. They quickly learn it takes three quarters to get one bag of M&M's.

One important lesson for both parents and children is to make sure the money being spent is the kids' money.

"I always say this, kids will spend unlimited amounts of money as long as it's yours. When their money is on the line, it's a totally different ball game," Bodnar said.

Here are some simple tools anyone can use: When your child reaches first grade, give them an allowance each week. A couple years later, open a savings account for them. When it comes to the teen years and credit cards, Bodnar said she would not rush it, even when they head off to college.

"I really believe that kids in college, at least freshmen and sophomores in college, don't need credit cards, I really am a big believer in a debit card tied to a checking account," she said.

They are the lessons that can last a lifetime, and experts say starting early can give your kids a better shot at becoming responsible savers rather than reckless spenders.

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