7 Tips for Helping Your Child Make Smart Money Choices

Your child is never too young to develop smart saving and spending habits. Here are seven ways you can help.

Discuss with your child a purchase you want or need to make, before you make it, to model your own strategies for figuring out if something is a ‘want’ or a ‘need.’ Then, when the child is faced with her own purchase, you can refer back to your decisions and how they worked out. You can even make a savings diary together!

Give your child the satisfaction of being paid for doing a task, whether that be taking out the trash on a regular basis, feeding the neighbor’s cat, or helping you sort laundry. It is also important to pay your child on a realistic scale so he can develop an understanding of why some jobs pay better than others.

Some parents prefer to give their child a weekly allowance to cover daily expenses. If you go this route, provide clear ground rules about how the money is to be spent. Other parents prefer their child find ways to earn spending money. Either way, discuss your decision with your child, the reasoning behind it and the responsibilities involved.

Encourage small savings projects so your child can actually see money accumulate over time. Remember, a little money saved over time can add up to a lot! Set goals that can be reached in a short amount of time to keep savings experiences successful. As kids gain more confidence in the value of saving, set up a bank account. See how they CyberSquad learns how to save and spend money wisely in “The Snelfu Snafu.” You can also make a Buzz bank with your child with compartments for “saving” and “spending.”

When your child needs to go shopping, help her look up prices ahead of time so she has a clear sense of how much money she will need. If she’s shopping for several items, suggest that she make a list and add up what she estimates each will cost so she can be sure she has enough money to pay for them.

When kids hear, “We can’t afford that now,” they often think the parents are simply choosing not to buy something. It’s important to give kids a more realistic picture and to help them gain a better understanding of what it takes to run a household. Help your child understand how a budget is made with the Cyberchase episodes “Balancing Act.”

A family vacation is a great opportunity for your child to participate in how the money needed to pay for the trip will be spent. Brainstorm expense categories (food, lodging, entertainment, shopping, travel) and agree on the total amount of money available to cover these. Then estimate how much money should be allocated to each of the categories.

Find more episodes, games and activities to help build your child’s financial literacy skills on the Cyberchase website.