Want to teach your kids to save?

If you want your kids to be smart about money, you have to demonstrate to them what smart looks like. Just talking about it is as effective as telling them to clean up their rooms. So how do you go about showing your kids what good money management looks like?

Give them money to save. Yah, that’s an allowance. And set the expectation that savings is something you do right off the bat. Don’t ask them to save 50% of their allowance. Are you saving 50% of your income? Set realistic expectations. You can use the 10% rule as a guide. Once your start your kids on an allowance, keep your hand out of your pocket!

Shop with a list. This is a great way to demonstrate that you have a plan to buy something, and you are only buying things in your plan. When you’re heading out the door, suggest that your kids make a list for things they think they will be buying with their money. If they see something that really grabs their attention, suggest that they put it on their list and you’ll return the following week to get it. Yes, it’s a little extra work, but it’s your job as a parent to do the extra work that teaches the important lessons, like the one about not impulse shopping.

Don’t spend money you don’t have. Sounds obvious, right? But parents are skilled at sending mixed messages to their kids. When they ask for something in a store, we tell ‘em we don’t have the money for that. But then we pick up something we like, say something dumb like, “I really shouldn’t” and pop it into our carts.

When you use plastic to shop, let your kids watch you pay the bill when it comes in. The idea that plastic has no consequence is one belief that has stuck with a lot of young’uns. They see parents whip out their credit cards to pay for things but they never see how the credit card gets paid. You want to tie the shopping “behavior” to the payment “consequence” so kids can clearly see the connection.

My latest book MoneySmart Kids is about to be released as an e-book. Watch for it if you’ve decided that it’s time to pick up the reins of your children’s financial education. Or you could just leave it to the school system. (You have seen how many teachers have been on Til Debt Do Us Part, right?)