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The Value of a Dollar

Teaching Money Management Skills to Children

By Sharon Waldrop

Dr. Flora Williams is a professor of family economics and financial counseling at Purdue University. Dr. Williams recommends that parents explain to their preteens that wants are continually expanding – but resources are limited. She encourages parents to spend time comparison shop, as this might teach kids to curb impulse purchases. "When money does not stretch, let it be a challenge to your creativity," Dr. Williams says.

There will always be those with more money and those with less. "Instead of saying 'we cannot afford,' say, 'We choose this for now.' This approach encourages communication and a positive concept where saying 'we cannot afford' does not," Dr. Williams says.

Todd Shepard is a financial planning specialist with Gent Financial Group in West Hartford, Conn. Shepard advises parents that preteens will absorb the teachings of their parents at different stages of their development.

"While consistently leading by example is always the best way to educate and lead your children down the right paths, my experience is that children will develop financially as part of their maturity process," Shepard says. "There must be 'financial hormones' in there somewhere."

Shepard says preteens will become financially savvy when they realize that money provides them power – something that preteens otherwise tend to lack at this stage of life.

Above all, Shepard suggests keeping it simple when giving financial lessons to a child.