If you'd like your children to succeed financially, it's up to you to play a part in teaching them how to manage money responsibly. Here are some suggestions from DCH Wappingers Falls Toyota on how to do so:
Give them a piggy bank and a few coins. Teach them how much each coin is worth. Move on to dollars. Once they understand the amounts, open a savings account.
Go over the family budget
Keep it simple. Get a whiteboard, chalkboard, or large slice of paper. At the top, write down how much money you make in a month. On the remainder, write down how much everything costs—house payment, utilities, necessities, savings, vacations, etc. Tell them that whatever is left over is for the family to have fun.
Teach the difference between needs, wants, and wishes
Play a little game. Write down 20-30 items and tell your kids to place them under the needs, wants, or wishes columns—velcro or magnets work well for this activity. Let them choose whatever category they think each item should go into, then discuss their choices. Explain why Iron Man Moon boots may be a want and tennis shoes may be a need, for example.
Help them set financial goals
Ask them to name something they really want. Together, conduct a search to determine how much it will cost. Determine what they're willing (assuming it's legal) and able to do in order to earn that amount of money (it's okay to chip in some of your own cash as long as the child meets a predetermined goal).
Let kids make spending decisions and feel the consequences
You know that twenty-three dollars worth of game tokens at Chuck E. Cheese is probably a waste of money. You tell your 6-year-old that spending the twenty-three dollars he got for his birthday at Chuck E. Cheese could be better used to buy snorkeling gear for the trip you're taking next month to Catalina Island. Even if he spends it anyway and cries uncontrollably the following week as everyone is having snorkling except him, don't give in—actions should have consequences, and it's better for children to learn that lesson sooner rather than later.
Encourage charitable giving
Money is neutral. What you do with it gives it meaning. Teaching children to donate to worthy causes helps them understand the true importance of money and the ability to help others. Taking a certain percentage of birthday money or allowance money and setting it aside for a specific charity will give children self-confidence and responsibility for life.