Jonathan Clements, personal finance columnist for the Wall Street Journal recently wrote an intriquing article about teaching wealth ("Teach Your Children Wealth: Why I Decided to Close Down the Bank of Dad"). He concludes the article with this: "Want to see how your children's attitude changes when they are spending their own money? Try one of my favorite tricks: Next time you go to the mall, give your kids $10 each to spend, but tell them you expect change. Trust me, you won't get much back. On a subsequent visit, give them $10 again. But this time, tell them they can keep the change. You will be amazed by how much less they spend."
Parents frequently ask me about this very subject. Teaching money is tough and believe it or not, young people pick up spending habits, skills and priorities from parents. When teaching money, give your child ownership, help them visualize and set simple short and long term goals for their money. Money should be a separate issue from others. Be consistent and predictable if giving allowance. But ownership and "keeping the change" are great strategies for helping a child understand value.
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