A Guide to Teaching Kids How to Earn, Save, and Budget Their Money

In today's society kids are often spoiled and because of this they don't understand the sacrifice that their parents make and end up not appreciating how hard their parents work. So it's important to teach children how to earn, budget, and save their money so they can understand the value of a dollar.

Here are 7 ways to teach children how to earn and manage their money.

1. Chores-Every member of the family should contribute to the overall upkeep of the household; even if one of the parents stay at home. So making a chore list will take the guess work out of who does what and when they do it. The daily chores should be age appropriate and should be balanced; not too easy and not too difficult. Then the parent can choose if the child gets paid every week or every other week; it would be more beneficial for older children to be paid bi-weekly and on the parents actual pay date if possible. In addition to this parents should not allow a child to get an "advance." If their money is all gone they should have to wait until the next pay day instead of getting it sooner.

2. Bank Account-Starting or setting up a bank account is a great way for kids to start saving. Parents should pay the minimum amount due to open the account but the responsibility thereafter falls on the child. Along with the account being set up they should be taught how to track their spending with a check registry. Of course a checking account wouldn't be appropriate for a 5 year old but they should be taught how to make entries (with supervision) so they know how much they have and how much they can afford to spend.

3. Sales-The majority of adults (especially the ones that balance the check book) wait until a sale starts before they purchase an item. Of course this usually doesn't apply to food shopping because if milk is needed it's needed now and cannot wait until later. Keeping a current copy of "shopping ads" will show the kids that they can save money if they wait until the store puts it on sale.

4. Research-Along with shopping for sales showing kids how to research a wanted item is just as important. If they are shown how a $20.00 item at Target can be purchased for $10.00 at Wal-Mart they'll be more likely to go with the lower price. Comparing items in different stores will again teach them to save but also how to research using the internet.

5. Shopping-Grocery shopping is one of the best ways to teach children how to save money; regardless of their age. Before a shopping trip children should sit down with their parent and look for sales ads, coupons to clip, and make a shopping list. When at the store parents should allow the child to problem solve and find the product that is more economical. For instance if paper towels are needed the child can pick out what brand is the cheapest. Stay away from aisles that are stocked with items that are not needed and don't buy anything if it isn't on the list. In addition to coupons, sales, and a shopping list, the child should be allowed to carry a calculator so they can actually see how much the items are adding up to.

6. Setting limits-In the age of "I want it now" kids don't always have to wait to get things because their parents give gifts so easy and quicker than they should. So instead of caving in to what a child wants the parent should hold back and let the child purchase the wanted item when they get paid. Now that the child is earning money they will be able to afford a wanted item if they save and budget properly.

7. Be a good example-Because so many people live beyond their means it's really important to be dedicated to teaching children to save and budget their money. Being a good example means to not buy things that can't be afforded, not use credit cards, and practice what is preached. Kids may not always do what their parents say, but they will do what their parents do.

Teaching kids how to save money early on will not only show them how to be responsible it will give them a new appreciation for how hard their parents work and they'll get a glimpse of how things will be as an adult.