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Teaching your children how to manage money

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CNY/NNY/S. Tier: Teaching your children how to manage money
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Any parent knows that taking a toddler to a store can be a challenge, but financial experts say it is also an opportunity to teach them valuable lessons about money. Money Matters reporter Tara Lynn Wagner filed the following report.

When it comes to teaching kids about money, it's best to start with the basics.

A group of children were asked where money comes from. One said "the bank" and another said, "You can find it on the ground."

A third child gave a much better answer: "My dad just works really hard at his work and he gets more money."

Beth Kobliner, the author of "Get A Financial Life: Personal Finance In Your 20s And 30s," says children should be aware of that crucial link.

"You have to work to earn money, and that's something parents can talk about, in the everyday experience of going to work," Kobliner says.

Keep in mind, talking about money is more than just talking about cash. Children under the age of 5 or 6 need to learn about concepts that will influence how they use money in the future, such as the difference between a need versus a want.

This vital lesson can be easily discussed in any number of settings.

"You can go to the store and say, 'Do we need milk or do we want milk? Do we need a chocolate bar or do we want a chocolate bar?'" Kobliner says.

Which isn't to say children can't sometimes get the things they want.

Kobliner, who helped spearhead the "Money As You Grow" website (, says that's actually a great way to introduce the benefit of waiting.

"You know, if I want to buy something, I will have to wait and save up my money to get it," says Kobliner.

One boy said, "I add up my money to see if I have enough to buy a product. It is usually LEGOs."

Another important learning tool is the piggy bank, which Kobliner takes to the next level. She says children should keep three jars — one for saving, one for spending and one for sharing. These jars are not just full of coins, but are also full of lessons.

"It's a really great idea to have them understand the concept between saving money for the long term and saving money to spend on something in the short term, because those are two different things," says Donna Rosato, a senior writer for Money Magazine.

Finally, these are children, so it pays to have fun and engage their imagination.

"Play store, take things off the shelf and say things like, 'I'm sorry, you don't have enough money for this.' Then they decide what to put back," says Dr. Barbara Nusbaum, a psychologist. "And then have them be the store owner, say. You can definitely play games like that." ClientIP:, UserAgent: CCBot/2.0 ( Profile: TWCSAMLSP