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TEACHING KIDS TO BE FINANCIALLY FIT

HOW TO TEACH CHILDREN ABOUT MONEY

One of the most valuable lessons you can teach your children is how to make smart decisions about money.

To take advantage of teachable moments as they arise, though, you need to consider your own financial values and what your children will be able to understand. Here is some advice on financial guidance kids of varying ages can take to heart.

THE EARLY YEARS While most preteens will grasp what money does, they may not know where it comes from or how it accumulates. A piggy bank is a good place to start, where young children can see firsthand that the more you put in, the more it will grow. Now is also a good time to model smart financial behavior: If you demonstrate you're mindful about how you spend money, your children will more likely be thoughtful with their own spending later.

THE TEENAGE YEARS As children get older, they may be able to earn their own money through chores or neighborhood gigs like babysitting. This could be a great opportunity to encourage thoughtful decision-making by having them pay for their own non-necessities and matching any funds they deposit into savings or donate to charity. For older kids working their first "real" jobs, that first paycheck could be an ideal time to discuss taxes, budgeting, saving – even investing and IRAs.

THE COLLEGE YEARS College offers many teens their first taste of independence – their first experience with the real-world consequences of their spending choices. At this stage, financial discipline becomes a must. Setting credit card limits can keep teenagers out of trouble while they learn to balance debt with other financial priorities – and build their credit.

AS YOUNG ADULTS Even as young adults, your children may rely on you for financial advice on taking out an auto loan or buying their first home. This could be a great opportunity to reinforce your lessons on budgeting and building a credit history. You might also teach them the advantages of saving for retirement early and applying for employer retirement benefits.

Of all the lessons you teach your children, being smart with money is among the most important. By taking the time now to discuss and model good financial behavior, you can help them become financially fit adults.

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