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The holidays are a fantastic way to teach your kids about money. Spending, saving, and giving responsibly are lessons all children need to learn.  Why not start with the holidays?

Introducing concepts of money management and instilling a good sense of fiscal responsibility should start at an early age, and be continued throughout a child’s life.  Below are some of the top money rules parents can teach their children during different life stages.

  1. Pre-School

Yes, money patterns start during the pre-school years.  You can start talking to your child about money when they are two or three by explaining that everything costs money – from the food they eat, the clothes they wear, to the house they live in.  These talks need to go beyond the necessities too.  Explain that new toys, accessories or video games are things your family can live without. Introduce new toys to them a few at a time, rather than showering them with over-abundance.  This will help them get used to the fact that they don’t need a ton of toys to be happy. 

  1. Elementary School

By the time your child is six or seven, you can start teaching them about prioritizing their money.  For example, when you are at the toy store, instead of letting them pick anything off the shelf, try giving your child five dollars and letting them choose something that fits within this price range.  For parents who buy their children anything and everything, the child will expect this later on in life too, giving them a sense of entitlement.  Ask yourself, “is this the reality I want for my child 15 years from now?”   

This is also the point to show your child that money is the result of hard work.  Work out a plan with a family friend or neighbor where your child will do housework or yard work for $5-$10 cash. Then give them the power to choose how they want to spend or save their hard-earned money. 

  1. High School

At this point in life, it is critical to create a financial collaboration with your child.  Encourage them to get a part-time job to help pay for their car insurance, their gas or portions of the monthly car payment.   Children should be held accountable for sharing some of these costs with their parents.  Once they get that paycheck, show them how it should be dispersed — 1/3 goes towards that car payment, 1/3 goes towards their future college fund and 1/3 can be spent on whatever they choose. 

During this age, it’s also important to highlight the importance of living a quality life, rather than the quality of things that you own.  Help your children understand that material things like a brand new car when they turn 16, are often a source of immediate happiness, but sooner or later, this happiness fades and they will be left searching for deeper self-fulfillment.

  1. College

Your child is an adult now. Have an adult conversation with them about their finances and make sure they understand how credit works.  Tell them about your experiences with credit card use – the good, bad and the ugly.  Once children are on their own, temptations will always arise and children in this age bracket will more than likely try to open a credit card to fund some of these temptations.  Explain how credit cards can bring a false sense of financial reality.  They make us less conscious of where our money is flowing.  Talk about how the constant struggle to earn cash to pay off debt can take a physical and emotional toll.

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