Don’t you love money? I think it is more important to teach our kids about handling money as they will become better savers if you teach them from a young age. They need to know about saving, spending, budgeting, investing and borrowing as they get older. I started teaching my kids about money when they started to count. Once they knew their numbers from one to ten we started looking at money. The coins first as they could play around with them and use them to count out loud. I have made a list of my twenty top ideas so you can teach your kids at home about money and what it means.

1.     Introduce them to money

Money isn’t evil, nor angel. There is nothing to be ashamed if you love money very much. Money is just one of tools you needed for your life. You need it for a better life. But it isn’t the measure of how success or how happy of your life.

2.     Teach them to about saving some each money each week

As my kids learned about the concept of money, I gave them a small allowance each week for doing little jobs around the house. They had to put their dirty clothes in the laundry basket and tidy up their rooms when asked. I would put two dollars in a money box for them every week. After a couple of months we took the money out and counted it. I told them how much they had and then we went to the shops. I told them they could each buy something out of their money, but they had to be sure it was something that they really wanted or needed as the money would go as soon as they spent it. Both of them bought a small toy. The next time I went shopping they wanted to buy a toy again. I explained to them that the money was gone and they would have to save up again. This was a bit of a shock; there wasn’t enough money this week to go shopping. I explained to them how saving money worked. That if they didn’t spend it all every week they could buy something bigger and better in a few months. This was the start of them saving money, hopefully for a lifetime. They each found something they would like to buy that was a few months worth of allowance and they saved all their allowance each week.

3.     Do I need that toy or do I want it? Saving and spending

As each year passed and my kids learned about saving for something bigger, I started talking to them about whether they needed it or merely wanted to have it. This made them think about what they would spend their savings on. I took them shopping with me and pointed out several things that I wanted to buy for myself. I found a really nice sweater, but I had already bought some new ones and didn’t need another one. I said mom would like that but mom doesn’t need another sweater. I said I would save that money because what Mom needed were some new curtains in the lounge room. I bought myself a money box and put the money for the sweater in it. I showed them that Mom was a saver too. In a few months we went and bought new curtains.

4.     Open a bank account

I took both of my kids to the bank and opened an account for them. Each week they could choose to bank all or some of their allowance. I did tell them that I expected some money to be banked each week. This gave them another record of how the money would add up if it wasn’t touched. They were also excited about earning some interest on the saved money. To them it was like money for nothing.

5.     Set a reachable savings goal

I made each child decide on an amount to save over a set period of time. They could do extra jobs around the house and yard that they would get paid for. It wasn’t long before they started to see the money grow.

6.     Set money boundaries

I explained to each child that I would pay for some things for them, such as a family outing but if they wanted to go to the movies with their friends that they would be expected to pay. They then had the choice themselves of what to save for and when to spend.

7.     Teach them about change

I told my kids that they would get change when buying an item. They would rarely have the exact amount with them. Teach them to work out the change from say a $5 note for something worth $3.75. This makes them aware of always getting the correct change when shopping. People can sometimes count out the change incorrectly. You want to always get the correct change from a purchase.

8.     Explain a budget

As my kids got older I explained to them about making a budget so they could save and still have some money to spend when out with their friends. I showed them the family budget and how we put money aside for the mortgage each month and the electricity and gas bills. They each decided on a budget for themselves and would save some money they earned each week. No real goals here, just the point of saving some of their hard earned money.

9.     Earning money can be hard work

To earn money, you need to work, and work hard. No one is just going to give you money for turning up. I suggested they ask the neighbors about washing their cars or mowing lawns for a reasonable fee. The harder they worked each weekend, the more money they would earn.

10.  Keeping records

As well as budgeting, I got them to keep a record of how much they spent each week and how much they saved. After a few weeks we looked at it to see how they had spent their money and if there was a way to save a bit more each week. Reminding them about college and cars helped. Both wanted to learn to drive and eventually buy their own car, this gave them an insight into how to spend wisely and save better.

11.  Value for money

Teach kids about value for money. When you go food shopping take them with you and explain about buying in bulk and looking for specials on the products you usually buy. Sometimes buying the larger amount is not cheaper than buying two smaller quantities of the same product.

12.  Research their costly purchases

I encouraged my children to look around for the best price on an item. If they wanted an MP3 player or an iPhone for example, I got them to go to more than one store and compare prices. Maybe one shop was a bit dearer but you got more with that purchase, a free case, or iTunes card for example.

13.  Impulse buying

Try to stop impulse buying. This will cost them money in the long run. Make them wait a few weeks before the latest gadget or DVD. Things always get cheaper the longer they have been for sale.

14.  Credit cards are not a good option

I taught my kids about credit cards and explained how they work. Yes you can buy whatever you want, but you are not using your money, it is the banks money and they will want it back. If you can’t afford to use your money it is not always a good idea to use the banks. They will charge you interest, but it will be more than they will give you for your savings. I sat down with them and worked out how long it would take to pay back for the bank $100, and how much interest they would pay.

15.  Loans can help you buy more expensive items

The kids know we have a mortgage on the house and we pay it back every month. Loans can be a helpful device for buying cars and houses as you might never be able to save that amount of money, no matter how hard you work. Teach them to shop around for the best deal interest wise. Don’t accept the first offer you see, a better one could be around the corner. Always use a reputable bank or credit union for a loan and help them with a new budget to pay the loan back.

16.  Charitable donations

I taught my kids about people who need extra to help them get through life. Not all people are as fortunate as them. They may have been born with a disability such as blindness and need help to live life to the full. It is always nice to be able to help someone worse off then you are. You can’t help everyone but choose a favorite and try to donate something each year. It doesn’t always have to be money. They could donate their clothes or books to a charity to sell or give away.

17.  Paying taxes

We all hate the tax man don’t we? We work hard and he wants his cut of our money. Unfortunately taxes are here for our lifetime. The government uses our tax money to fund various departments to provide us with services like roads and water. I recommend that they always put a bit extra aside just in case your 1040 form comes out with surprises. This is really important if you have changed jobs or had an extra job for a while.

18.  Budget for a holiday or large purchase

I also taught my kids about as budgeting for a holiday as well as their weekly or monthly budget. Holidays can be costly as you still have the same expenses at home on top of the cost of your holiday. It is like living in two places for a month. I opened another savings account that earned more interest if I made regular deposits and didn’t touch it for 12 months. Just a few dollars each week can make a huge difference to the price of a holiday, fridge or washing machine.

19.  Investing money for the future

Each time my kids had saved a few hundred dollars we looked at buying bonds or putting it into a different account that accrued a higher interest rate over a longer period of time. This is an investment account that will grow by itself to a certain extent and grow even faster the more money you add to it.

20.  Set your kids a good example

Above all, teach your kids about saving by setting a good example and saving money too. Show them your budget for the household and how you mange to save for a holiday. This will show them a budget in action.