How much do your children know about money? You can teach them a lot about how to manage money. Start by deciding how each money gift or allowance received will be spent. Rules can cover how much will be spent for the following.
Free spending. Decide who will have approval of what this is used for. If you will have final approval, make it clear that your approvals will be made only based on safety or morals, not whether you like or agree with their choices.
Savings for needs. Make sure your children have savings accounts. Let them deposit
some of their money for important upcoming needs. Have them make a list of a few choices of what they want to save for. Explain that you will have veto power over their final choices. If you do veto a choice, talk with them about why you are doing so. Also, share your pros and cons about their OK choices. Examples: special vacation, college fund, sports camp, music lessons, etc.
Savings for wants. Let them deposit some of their money in their savings account for things they want but don’t yet have enough money for. Like with “free spending,” if you will have final approval over spending for wants, make it clear that your approvals will be made only based on safety or morals, not whether you like or agree with their choices. Examples: computer games, bicycle, sports equipment, tickets to events, etc.
Charity. Consider letting this be a charity of your children’s choice, providing it is an official charity with a good reputation.
It is highly important to pass on the importance of money and saving. It should be considered a life skill and taught early on in a child’s life!