A Fun Outing

For children aged 3 - 12. Take your son or daughter to her favorite store. Give her $2, $5, and $15 dollars to spend. (Amount doesn't matter as long as she can purchase something for that amount.) Let your child take her time to decide what she'll buy. It's easiest to take one child at a time for this outing so you can help her add (Can I have both?), subtract (Can I have this one if I put this one back?), and judge bang for the buck (Which will I enjoy more?). Not only does this outing reinforce math skills, it gives your son or daughter perspective on how far money does - and doesn't - go.

For children 12 and up. When it's time to buy new clothes, tell your son or daughter the budget and conditions. For example, she needs to buy at least 2 pairs of pants, 3 shirts, and a pair of shoes with the money. The trick here is NOT to give her more money even when she pleads, "just a little more?"

Allowance?

Whether or not you should give your child a weekly allowance is up for grabs. Some parents feel children shouldn't be rewarded for helping with chores of everyday life. Others feel an allowance teaches children to save and spend wisely.

Let Her Earn It

In either case, you might consider a "You Can Earn It" chart. Here you write weekly chores over and above what you already require of your child. Sorting laundry, raking, cooking a healthy dinner and cleaning up after - whatever would help you - can go on the chart. (Factor in the age and ability of your child. You can add more demanding chores as your child grows.) Next to each chore is a dollar figure. If your child completes a chore to your satisfaction, she gets paid the amount it's worth. She earns money, and you get extra help in the house.

It'll Cost Her

The flip side of "You Can Earn It" is "It'll Cost You." Here you list what you expect of your child each day. Hang up coat, walk the dog, practice piano - anything you are tired of reminding her to do is fair game. Next to each chore write a dollar figure and time frame. If she doesn't practice her piano by bedtime - without you reminding her - you dock 50 cents from her allowance that week. It may take a few days, but she'll get it soon enough.

Money for Everyday

Let your child see you pay the bills. Show her your deposits and the checks you have written. Money out shouldn't (and in most cases, can't) exceed money in.

Show her how you save for her college or your retirement. Do you deposit money each week, each month, once a year? Show her how the money earns interest and increases.

Explain the ATM or "Money Machine" is like her ceramic bank. Just like her, you can only take out what you've put in.

Take your son or daughter to the grocery store. Give her a calculator, and ask her to keep track of the food bill. Every time you drop something in the cart, she adds it up. Not only does she learn what things cost, she sees how quickly the peaches and chicken and frozen yogurt add up.

Give your child credit. If she wants something and doesn't have enough money, float her a small loan. Decide on a repayment schedule (and how she will earn the money), complete with interest (at least a little.)

Educate Yourself

If managing money – and teaching your children to manage money – seems overwhelming, do everyone a favor and educate yourself. Take an adult education class, read a book from the library (Robert Kiyosaki's “Rich Dad, Poor Dad” is informative and engaging), go online, or even hire a financial planner to assist you. Remember the old adage, “Reap what you sow?” When it comes to managing your money, being proactive is the name of the game.