7 Steps to Financially Smart Kids
By Loral Langemeier (as seen on the Dr. Phil Show and website)

Helping your children learn about finances is easy and fun. Many of these important facts are not covered in the school curriculum, so we must teach them at home. Use these 7 Steps as a starting point to begin the conversation about money with your children.

Step #1- Give your child an allowance.
  • Allowances help teach basic money management and economic principles, while also reinforcing responsibility and discipline.
  • Children should learn early that people must work for money; it's not free; tie an allowance to tasks.
  • Assign intellectual tasks as well as household chores.
  • Kindergarten age is a good time to start, but the conversation about money, can begin even earlier. Don't wait until it's too late!
Step #2- Open a bank account for your child.
  • Learn about checking and savings accounts and how banks earn income.
  • Have them track their spending on a balance sheet or computer software program.
  • This will help them learn how to keep good records of money saved, invested, or spent.
Step #3- Let them make some of their own spending decisions.
  • Begin small, with a small portion of their allowance, have them make a purchase. Whether good or poor, they will learn from their spending choice.
  • Discuss the pros and cons of the purchase, before the spending takes place.
  • Teach them to weigh their options carefully, should I purchase now or save up for a bigger item.
Step #4- Continue the conversation about money around the kitchen table: Play games and have family money meetings.
  • Monopoly- Teaches real estate and business investing concepts, as well as property ownership and creating income from real estate investments.
  • Game of Life- Teaches the concepts of bills, loan payments and insurance.
  • Millionaire Maker Board Game- Teaches money management strategies, how to read financial statements, and provides information on how to run a business and investments.
  • Establish a regular schedule for family discussions about finances.
  • Discuss what's happening with the national and local economies, how to save money at home, and alternatives to spending money.
Step #5- Teach them money skills in real life situations!
  • Have them help you pay bills. They might start turning the lights out when they leave the room!
  • Teach them how to evaluate product ads, and how to decide which is the best deal or offer.
  • Use regular shopping trips as opportunities to teach children the value of money.
  • Making a purchase? Have your older child research car value and payments on the Internet and provide you with options.
  • When using a credit card at a restaurant, take the opportunity to teach children about how credit cards work.
  • Purchase penny stock and track its progress every morning in the newspaper. You can also do this without actually purchasing the stock. Either way it's fun and really starts great conversations about wealth building.
Step #6- Start a Business
  • What does your child like to do?
  • Can they help you or a family member in a current business?
  • Have them think of ways they can make money, i.e. paper route, washing windows, babysitting, or mowing lawns etc.
  • Have their first customer be a family member or close friend, and then have them expand to your local neighbors. Teach your kids entrepreneurial skills early on!
Step #7- Teach Them How to be Charitable
  • Teach your child about charities and the services they provide. Help them find a cause that is meaningful to them and make a donation in their name or better yet have them set aside a portion of their earnings. Kids can even set up a small enterprise to help raise even more money. The possibilities are endless!
  • Take your child to the local toy store and have them pick out and purchase an item for a less fortunate child. Teach them how some families are having money problems and talk to them about helping others. The main lesson here is compassion however a financial lesson can be learned too.
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