If you are one of many who believe that children really do imitate what they see, then it's important to start early in teaching your youngster to practice good spending habits. When he/she matures and enters college or the workforce, the habits that they learned as a child will remain with them through adulthood.



Learn to Earn.

When they are young, it's important that children learn to earn their money through chores and other similar activities. Whether it's a lemonade stand or helping the neighbor to plant a garden, it's a good idea to teach children that money is something that is earned and not given freely. If an individual learns the value of a dollar early, he/she may be less likely to participate in frivolous spending later on.

Saving for Tomorrow.

When it comes to the latest doll or video game, children often have a large wish list. With the exception of holidays, birthdays and other gift-giving occasions, it's important that a child learn to save his/her money for the things that are high on their list of wants. You can either match their payment for an item, which means they come up with 50% of the purchase price and you match that with the other 50%, or you can suggest layaway. Either way, your child will learn that saving their money is a good way to get the things that are important to them. Later in life, this may help them to avoid debt by excessive spending on items that they may not be able to afford.

The Perks of Prepaid.

Whether it's a prepaid cell phone or credit card, it's a good idea to teach your mature child how to prepare themselves for independence. Even with years of learning the proper spending habits, a young adult is faced with many challenges upon entering the ?real world.? As they prepare for college or the workforce, it may be a good idea to explore the world of prepaid cell phones and credit cards. This will regulate his/her phone calls, which will prevent an excessive phone bill and will also teach discipline in how phone time is used. A prepaid credit card will teach a young adult to spend only within their means and to stretch their dollars as much as possible.

The Debt Dilemma.

Teach your child the potential concerns dealing with credit cards, high interest rates and the importance of maintaining a good credit score by paying their bills on time and not spending unnecessarily. Without the proper credit history, obtaining a future home or auto loan may be difficult or even impossible.

The Cash Stash.

Teach your child to save a portion of his/her allowance, earnings or other money with the help of a savings account. If your child can learn to tuck away 20% of their incoming cash, this trend will likely follow them throughout adulthood. A good rule of thumb is to have enough savings to carry you through six months, which could be needed as a result of an illness, relocation or job layoff. For these and other reasons, it's a good idea to save money whenever possible.

It's never too early to start instilling good spending and saving habits into your child's behavior. Throughout his/her life, these tendencies will play a large role and you can take great pride in knowing that you prepared your child for a prosperous financial future.

The information contained in this article is designed to be used for reference purposes only. It should not be used as, in place of or in conjunction with professional financial and/or parenting advice or recommendations.