Teaching Your Children About Money

1. Show how patience pays off. Grab a calendar and sit down with your kids. Do the math to find out how long they would have to wait to save enough up for a certain toy. When that's figured out, it's just a matter of checking off days until the allowance money has built up sufficiently. Most kids find a little excitement in marking the calendar every evening in anticipation of an event (like counting down for Christmas), and the whole process will be a great illustration of the value of saving. Show firsthand what it means to keep your money until you can get what you want, and that lesson will hopefully stick with your kids for years to come.

2. Teach them to plan ahead. If your kids don't have a savings goal, they won't be inspired to spend wisely. Then, when something comes along that they absolutely have to have, the money won't be around with which to buy it. Explain the importance of keeping their eyes on the prize, setting lofty goals and working hard to get what they want.

3. Help them appreciate what they have. In addition to reminding myself how lucky I am, I try to make sure my kids are aware of their good fortune. If your children get an allowance, they're pretty blessed, and it's important they understand that. Granted, it can be very hard to make a child see how good life is when something's just gone wrong, but money can actually provide a good vehicle for explaining these concepts. If you can make your children feel lucky to have any money at all, it's more likely they'll hold onto it and treat it with respect. If you can get that lesson taught early, your kids should be in great shape going forward.