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Teaching children about money
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Include children in your business ventures
Most children and teens don't know what their parents do to earn money. Sure dad may be an engineer and mom may work in IT, but what does that really mean? What do they do all day? Once children learn what adults do in different jobs, they become more invested. Take your children to your office and let them see where you work, who you work with and what you do all day.

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Let them participate every once in a while in your business ventures. If you sell antiques as a hobby to earn extra income, let them play a role. There's always some way that children can help, regardless of their age. Even preschoolers can help with easy office work such as organizing business receipts.

"Their involvement needs to be age appropriate," Langemeier says. The activities should also be appropriate for the children's comprehension level. But when they get to know how you earn the money, they begin to have a greater understanding of the bigger financial picture.

Hands-on activities
Most people learn best when they experience something firsthand. Children and teens are no different. To learn good money-management skills, offer real world lessons. For example, if the family is considering buying a new car, let your daughter look up the trade-in value. Sit down as a family and discuss the options you'd like to have. Suggest that your son go to three different car dealerships to get quotes on two different types of cars with the options the family has agreed are worthwhile.

One exercise Baker has his students do is count the number of spare "doughnut" tires on cars they see over the course of one weekend. He explains that when there's a "doughnut" tire on someone's car it can only mean two things: Either the driver just had a flat tire and is on his way to have it repaired, or the flat occurred some time ago and the driver doesn't have $50 to get it fixed. Baker says it's usually the latter.

The point of the activity is that it gives the students the opportunity to see how many people can't afford to handle the unexpected.

If the driver had an emergency fund, something that Baker suggests his students have in addition to savings, then he or she could afford to have the tire repaired. The students love this type of activity because it's something they can relate to and see for themselves.

"If you make it interesting to them, they're more likely to learn and enjoy learning," Baker says.

Bankrate.com's corrections policy -- Posted: Nov. 8, 2006
 
 
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