With an allowance and extra earned money, kids should learn the difference between needs and wants – a distinction that makes itself clear once their own money is at stake for that impulse grocery store treat. Regardless, parents need to let their kids make the decisions about their money. “Sometimes you want to step in and say ‘That’s not a good idea,’ but one of the best teaching tools parents have is letting kids make mistakes, reflect on them, and then figure out how to do it differently in the future,” says Hodgens. It goes without saying that money mistakes made as child are usually far less costly than those made later in life.
Here’s another tip for teaching responsibility: When it comes time to buy back-to-school clothes or other necessities, give “tweens” a predetermined amount of money, in cash, and let them decide how to disperse it. “When it’s gone, it’s gone. Kids will become very, very picky and start looking for sales when they’re doing the buying,” says Hodgens.
