Top things to know

In Lesson 12

Allowance inflation Glossary Take the test

Top things to know Making allowances Saving and spending Teen years: Credit Teen years: Investing

Money 101 Lessons

Setting priorities Making a budget Basics of banking and saving Basics of investing Investing in stocks Investing in mutual funds Investing in bonds Buying a home Controlling debt Employee stock options Saving for college Kids and money Planning for retirement Asset allocation Hiring financial help Health insurance Buying a car Taxes Home insurance Life insurance Estate planning Auto insurance 401(k)s

1. When it comes to teaching kids about money, the sooner the better.

Up until they start earning a living, and sometimes well beyond that, kids are apt to spend money like it grows on trees. This lesson will help you put your children on the road to handling money responsibly.

Long before most children can add or subtract, they become aware of the concept of money. Any 4-year-old knows where their parents get money - the ATM, of course. Understanding that parents must work for their money requires a more mature mind, and even then, the learning process has its wrinkles. For example, once he came to understand that his father worked for a living, a 5-year-old asked, "How was work today?" "Fine," the father replied. The child then asked, "Did you get the money?"

2. Once they learn how money works, children often display an instinctive conservatism.

Instant gratification aside, once they learn they can buy things they want with money - e.g., candy, toys - many children will begin hoarding every nickel they can get their hands on. How this urge is channeled can determine what kind of financial manager your child will be as an adult.

3. Seeds planted early bear fruit later.

It's important to work on your child's financial awareness early on, for once they're teenagers, they are less likely to heed your sage advice. Besides, they're busy doing other things - like spending money.

4. An allowance can be an effective teaching tool.

When your kids are young, giving them small amounts of money helps them prepare for the day when the numbers will get bigger.

5. Teenagers and college-age kids have bigger responsibilities.

Checking accounts, credit cards and debt are as elemental to the college experience as books and keg parties. Teaching high-schoolers about banking and credit will make them more savvy when they leave the nest.

6. Even investing should be learned early.

High schoolers can and should be taught about the market - using real money.

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Retirement savings calculator Glossary Take the test

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