The Three Best Ways to Teach Kids about Money: Practice, Practice, Practice. Family Finance Picks #64

Practice, practice, practice. Everyone agrees that kids need lots of practice to master a skill, right? Whether its sports, academics, music, you name it.

So why not give your kids lots of practice when it comes to the critical life skill of managing their own money? Without it, your kids are headed for trouble. Kids can’t fully develop personal finance skills by playing games or by having you make all their financial decisions for them. That’s like expecting your child to become a great hockey player by playing an online hockey video game or just watching you skate around the rink.

So, where do you start?

To practice, kids need some real money of their own. Don’t get too bogged down in classic allowance vs. paid chores debates when it comes to determining your child’s source of income. Just pick an income source and amount that makes sense for your family’s situation. Then, give your child the freedom and responsibility to make regular spending, saving, and giving decisions with that money — within some minimal set of basic boundaries that you establish.

Through repetitive trial and error along with your guidance, your kids will develop the skill of making wise money decisions.

Practice makes perfect — or, at least proficient.

With the “real world practice” theme in mind, here are the family finance picks of the week:

Why Monopoly Is A Terrible Finance Teacher

by Amy Fontinelle on Investopedia

A bit of a “party pooper” post from Investopedia about Monopoly, but a good reminder that the best games are designed first and foremost to entertain. To really learn something, like personal finance, nothing rivals real experience. It’s all about (real) practice.

Discuss on FaceBook.

Websites Encourage Kids to Learn about Finance Online

by Dan Bobkoff on Marketplace Money Matters

FamZoo Mom, Suzanne Skyvara, was back on public radio again last Friday in this longer four and a half minute interview segment — an expansion of the original shorter broadcast here. Suzanne describes how FamZoo helps her kids practice making financial decisions like the trade-off between spending extra money on a soda now versus saving it toward a video game purchase later. The experiential learning includes living with the consequences of truly bad decisions, too: like losing $10 to your brother over a spontaneous bet about the name of a video game. Oops.

Related FamZoo Activity: Review your child’s financial decisions with them each month.
Discuss on FaceBook.

How Much You Should Pay Your Kids For Allowance

by Ryan C. Fuhrmann on Yahoo! Finance

Ryan pens a solid, and pretty typical, article on allowance basics. He wades into some of the classic debates such as whether or not to pay for typical household chores. The gold of the article is all in the “Bottom Line” section at the end. Ryan reinforces the notion that the true value of an allowance is creating an environment in which kids can practice making financial decisions. That’s nicely captured in the classic allowance-amount axiom that Ryan highlights:

A child’s allowance should be enough to allow them to buy something small right now or save for something big later on.

Related FamZoo Activity: Help your child track progress on a savings goal.
Discuss on FaceBook.

We’re constantly scouring the Internet looking for articles related to family finances and teaching kids good personal finance habits. You can visit our ever growing list of family finance bookmarks here. We’re up to 2,992 now!