smart spending

5 tips for raising money-smart kids

Don't bail them out
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Don't bail them out

Every child will make mistakes, but parents must let those mistakes teach children the lessons they need to know, Rhodes says. "If, for example, your child was saving for a big purchase but does not have all the money, don't give in and give it to him or her. Instead, make sure they work for it or, dare I say it, make them wait," he says.

If you want to help them, rather than simply giving them a handout, take the chance to teach them about borrowing and lending. "Lend them the money and then explain that when it is paid back, they will have to pay you more," Rhodes says. "Helping them to learn the discipline of money management while they are children making only $6 is far better than them learning as an adult when they are making $60,000."

If your kids have spent money unwisely and beg for your assistance to refill the coffers, "parents must not feel sorry for the children and bail them out of a penniless state," Tordella says. Instead, use the opportunity for a teaching moment: "Encourage them and ask, 'what could you do next time to plan better?'"


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