Tip of the week: How to teach kids about money

Give weekly allowances. This age-old practice still works. The “general rule of thumb” is to halve the child’s age and give that number in dollars, though the family’s budget should be considered.

Let them foot the bill. If Bobby wants a new Wii game, let him use his own money. Kids learn how much cash is worth “when it comes out of their pocket.”

Keep tabs. Parents should know what their kids are spending the allowance on. Instead of simply dishing out more dough, have your children record their purchases so they can see where they can cut costs.

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But don’t micromanage. Kids will make mistakes with their spending, but the ideal time to learn is when the “financial consequences are low.” Open savings accounts in their names to get them used to “tracking and balancing” their own finances.

Source: Family Circle