Give so they can do anything but not nothing

Warren Buffet once said, "Give enough to your kids so they can do anything, but do not give them too much so they can do nothing." Love the quote! So the great billionaire Warren Buffet, instead of just throwing money at his kids, he's giving them just enough to learn how to deal with money and to make a difference in the world...kudos to him. We are no Warren Buffets.....so how do the rest of us get our kids in the right mindset when it comes to money?

• Kids need to learn early on that working for money builds character. This is why many parents are moving towards the commission based system rather than the allowance system.

• Lead by example. It does no good to preach to your kids about living within your means and delaying gratification if you can't do it yourself. Kids will copy what you do. Do what I do and not as I say, right?

• I blogged once before that our kids do not just get things from the store on a whim...if it's not a birthday or a major holiday, they ain't gettin' it (and now they don't even ask). If they see something they like, they save up for it or use some of their own money from their piggy bank. I let them exchange the money for the item at the checkout counter themselves. Make sure you tell them about sales tax and how that figures in. My kids understood that concept as early as when they were seven years old.

• Don't always bail your kids out. My kids have done without when they didn't plan ahead. How often does this happen? Almost never now. This isn't quite as effective when they are smaller, but it sure is when they are teens and older. You have to sit back and think...am I helping them or enabling them? If I give them this money, will it get them out of a bind and on the road to being independent or am I making them be more dependent by doing this? For example, let's say your child is constantly letting the gas run low on their car and is always asking for a handout. They don't plan ahead. So, let's say you don't give them the money next time...and they just can't go out or they do without. It's not going to kill them. As soon as they figure out they need to be more responsible and you won't bail them out every time...they will forced to be more responsible. It's almost magical.
  

• Teach them about money and limits and delaying gratification. Talk to them about money coming in and money going out, living on credit, what an interest rate is and how it affects them. I am always shocked our schools don't teach basic money management. It's up to you, the parents, to send your kids down the right path. Don't rely on anyone else. A child as young as eight can understand these concepts..that's when our kids "got it".
  

• When your child is 13, open up a checking account for them. Have them deposit their babysitting or lawnmowing money in there. Show them how to do a checkbook ledger. Show them what happens when you don't keep track and get overdrawn. How will they ever do this stuff as an adult if you don't teach them now?

• If they absolutely want to have that next big ticket item, get them to cut out a picture with the price, and put it on their wall as an incentive to save. It may even be cheaper by the time they actually get out there and buy it.

• It's okay for your child to make mistakes. Better to make them now then when they are totally on their own. My motto has always been to learn from others' mistakes, but for kids, screwing up themselves tends to make the concepts stick more.
  

Continue to set a good example for them. They learn by watching you. Set them up for success early in life and spare them the mistakes later...when they are more costly.

How do you teach your kids about money?