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How to Teach Your Kids Money Management

Karen Cordaway

Kids seem to figure out at an early age that money can get them things. More often than not, it feels like there is always something that your child wants. At the grocery store, there are treats at the checkout. At the mall, there are kiosks with toy helicopters, gadget cases and enticing cinnamon-flavored treats. The financial experts below have tips on how to use those experiences to teach your child to spend wisely, have more money and get the most for their dollar.

1. Set ground rules.

"I teach my clients to do exactly what I did with my daughters when it comes to shopping. We calculated the cost of an item before we went to the store. If they received $100 for their birthday and wanted new clothes, we estimated how many pairs of jeans or shirts they could buy with that amount. I also made them include tax. This allowed them to see how far $100 really goes and kept them focused when we went to the mall. If they wanted to buy a pair of shoes, they would have to forego an outfit, for example. It helped them truly see the value of money and learn how to budget," says financial expert and author Dorethia Conner of Conner Coaching.

Along the same lines, Andrea Travillian, a financial planner at TakeaSmartStep.com says that one of the first things she suggests to parents is to have their kids pay for their own toys, with the exception of birthday and holiday gifts. "This allows your child to learn how to save money, manage different wants, learn discipline, avoid entitlement and even comparison shop," she says.

2. Become a savvy shopper.

Have you ever wondered how some people are able to afford so much on a limited budget? They might be a bargain hunter that knows when and where to find sales. They could also be secretly shopping resale. Many secondhand shops have treasures that enrich your life without depleting your bank account. If you don't mind buying used goods, typically at a lower price than new, this approach might be an option for you.

Jason Hull, a financial planner at HullFinancialPlanning.com, says that his parents give him a budget for clothes as soon as he started wanting to wear "cool" clothes. "If I spent it all on one shirt or pair of jeans, then I would wear that same thing every day. Since I had a limited budget, it taught me to look for sales and appreciate the value of the after Thanksgiving and after-Christmas sales. Back when I was a kid, I valued money a lot more than I valued time, much to my parents' chagrin. It also taught me to go look at consignment shops for good deals. I was a Goodwill shopper before Macklemore made it cool," he says.

While location for military families may change, certain shopping techniques stay the same. Doug Nordman, author of "The Military Guide to Financial Independence and Retirement" says that military families face special challenges. "Raising a military kid is always tough because of the frequent deployments and family transfers to new locations, but some parenting techniques work all over the world, including ones for shopping. We raised our daughter on thrift stores, Craigslist, and garage sales, because that's also where we do most of our own shopping. The rise of social media also brings buyers and sellers together on military bases," he says.

3. Set a foundation when kids are young.

For financial writer Miranda Marquit of PlantingMoneySeeds.com, setting expectations early is key. "I am clear that my son has to buy certain entertainment items on his own, or wait until birthday or Christmas to request items. I also require him to give 10 percent of his income from all sources to church or charity, and put 20 to 25 percent of it away in a long-term savings account. I'm just starting to teach him about investing, and money he earns from working in my home business goes mainly to investing, rather than to a savings account," she says. She also recommends the book, "How Ella Grew an Electric Guitar," which focuses on entrepreneurship and creativity.

Darrah Brustein, author of "Money-Making Sunny," believes in directly teaching children about money through engaging stories. "By setting an early foundation about savings, spending and the value of a dollar, we can help future generations find themselves in a more sound financial environment than we know today," she says. She adds that it wasn't until she graduated from Emory University and accepted her first full-time job that she realized how few of her peers were equipped with the tools to navigate their newfound independent finances. "Watching many of them live paycheck-to-paycheck, even with well-paying jobs, I realized that this was not unique but the norm. That's what inspired me to start writing for children."

Teaching your kids how to shop and manage money is a process. They won't be fully fledged financial gurus overnight, but by giving them opportunities to make their own decisions, they will become more financially savvy in the future.

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