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Are you teaching your children to be smart about money?

Most parents have to be careful with their money. Raising a family isn't cheap. Even when you have a good income, it pays to know where your money is going?

Are you teaching your kids the same thing?

Even when money is tight it's easy to want to give your kids everything they want. Doesn't mean that it's a good idea, just that it's something easy to do. But kids don't need everything that they want.

There are a few aspects to being smart about money.

Want vs. Need

Teaching your kids to understand the difference between wanting and needing is a vital step to take. It's something you can teach even when you're giving them something just because they want it. That doesn't make it an easy lesson to learn.

Kids want lots of things. Often lots and lots of things if they watch much television at all, talk to friends at school and so forth. It's the simple desire to have what they think others have.

The things that are needed are pretty easy to explain, but don't assume children won't be mentally adding in some of the things they want. The younger kids are, the more wants feel like needs. Just keep explaining that things they need are things they must have for life. Wants are the things that are more fun to have.

Keeping to a Budget

We all know how little fun it is to keep to a budget much of the time. It's work, especially if the budget is a tight one.

You have a few ways to teach your child to keep to a budget. Giving an allowance is one way. It helps if you expect parts of the allowance to be used in certain ways.

The requirements you give will vary by your child's age. Younger kids you might only expect to put some of the money into savings or give some to a charity or your church. Older kids might be expected to include paying for school lunches. Still older kids could be expected to budget for their clothes, cell phone and other items that you've been paying for.

Obviously, the allowance should be increased depending on what you expect your child to budget for.

Just how challenging you make budgeting for your child depends on what you think your child is ready for. You don't want to make a child budget for school lunches if he or she has never dealt with a budget before. But the more you can teach your child to do well on a budget, the better the lesson.

You can do a lightweight version of this when shopping for clothes with your child if you don't want to do it through an allowance. Give them a budget for the particular things they need to shop for at the time. Give them some motivation to do well, and help them to see that spending wisely means being able to buy more of what they want, or that they get to save money for something else.

Encourage Savings

Do your best to help your children understand the importance of having some money saved up. They can save for larger purchases they want, for college, for that first car.

This is an important lesson even if your kids earn money on their own. Think of it as building the habit of not living paycheck to paycheck early on.

Exactly how you go about teaching your kids to be smart about money depends on your child's personality and your own beliefs about money. But you can start them from a very early age and help them to be smart about it throughout their lives.

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About the Author
Stephanie Foster runs as a resource for moms who stay at home. Learn more about living on one income even when the economy isn't good at her site.