12 Ways to Teach your Children the Importance of Saving Money

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How many times have your children had a melt down at the supermarket because they wanted that toy, candy or bag of chips?

After a good while of whining, you give up and you end up saying yes and giving your child what he/she wants. But there has to be a better way to teach your children about money, and most importantly, spending habits.

U.S. News has compiled a list of 12 tips to help you teach your children the difference about needs and wants, and how money unfortunately, does not grow on trees.

Use cash. Kids can see it and understand it, and it gives them a better sense of how much things cost.

Play games that involve money. That could be Monopoly or a variation of store, where kids create a pretend store and sell things for play money.

Show and tell through everyday lessons. Take kids shopping and discuss what things cost and why you’re buying what you’re buying. Take them into the bank with you and explain what you’re doing. “It’s getting harder and harder to do that with devices in everybody’s hand and everybody’s ear,” Hebert says. But many teachable moments occur in the car and while you’re making your own shopping choices. With younger children, you can make up stories that involve good and bad money choices, as well as share choices you’ve made in your lives.

Teach kids to divide their money into the categories of spend, save and give. Pay them their allowances in smaller bills and coins, and they can divide it into envelopes or jars. They may need two save categories, one for short-term goals, such as a new iPad, and another for long-term goals, such as college. For their give jar, kids could pick a charity and then set a donation goal.

Model good money behavior. Let them see how you make money choices and that you don’t always buy everything you want.

Involve kids in the planning. This could be clipping coupons, reading grocery ads, making the grocery list or searching for good school supply deals. “I think the secret, at least for me, was to give them choices,” Hebert says. “They felt they had more control.”

Use devices to discuss money concepts. Instead of you and the kids being immersed in your separate devices while waiting for the dentist, use your cellphone calculator to discuss money concepts or solve word problems.

Give kids a lump sum of money and let them decide how to spend it. For example, provide a weekly or monthly allowance that includes money for clothes, school lunches and sports fees and requiring the child to live within that budget.

Share family financial realities. You don’t need to share all the family financial details, but it’s good to let kids know how much you pay for things, such as mortgage payments, utilities, cellphones and clothes. If the family clothing budget is $10 a month for four people, let them know that

Don’t be afraid to confess your own money mistakes. “If you’re upfront with kids about your mistakes with money, they learn from your mistakes,” Hebert says.

Say no and stick to it – but explain why. “A lot of people are quick to just say no without going into the explanation,” Hebert says. And the explanations help kids learn about making good choices. But, she says, “Sometimes you just have to take a stand and let them scream.”