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Money Mama

Teaching Kids About Cash Ensures Financial Futures

By Kim Seidel

Teaching your child to save their money also is vital to creating financially healthy children, say experts. "It is important that they learn to spend less than they earn, and avoid debt at all costs," Helfert says. "By saving their allowance over time, they will have more than enough for that toy they would otherwise have to beg for. It is important that they know that borrowing the money to buy the toy will put them in a position of debt."

Helfert also suggests setting up a fund for a child and promising to match the money they put into it. "This will not only encourage them to save, but it will ingrain the idea of saving as a smart thing to do," he says. "They will start to save the money they earn at an early age."

Another good idea is to give small shares of stock and start small funds for young children, Helfert says. As they grow older, they may then be encouraged to develop an interest in investing. "They will be pleased to see the small checks and dividends that they receive," he says.

Simply following the market and setting up fake portfolios also is a way to teach children about money. Parents also can get children excited about money by taking them to the bank, Helfert says. "Introducing kids to the idea of money and its management should be fun and interesting," he says.

For more information on Mackey's program, visit www.prosperity4kids.com.