Alex Matjanec was not the kind of kid who spent his entire allowance on candy - his parents would never have allowed it.
But Mr. Matjanec, the 27-year-old co-founder of mybanktracker.com, is not resentful. In fact, he credits his parents with helping him steer clear of the sorts of habits that can lead to debt and credit problems later in life. "They really did help me financially be smarter and more attuned with my finances and the value of the dollar," he says.
At his parents' urging, Mr. Matjanec got his first job, delivering newspapers, at age 9. He opened a savings account at 10 and had his first credit card by his late teens. He now works in personal finance (his website helps consumers make banking decisions and save money) and he urges parents to take similar steps with their own children to put them on the road to financial independence.
"Learning the basics of financial management will set the path for financial health and may keep them out of debt when they get older," Mr. Matjanec says.
A few of his tips for raising money-savvy kids:
1. Encourage them to apply for a credit card . With set rules - and monitoring- a credit card can help them learn credit and debit management. If you're worried they'll rack up big bills, make sure the credit limit is low and consider holding onto the card and allowing your child to use it only in your presence.
2. Open a chequing account for them. Still not sure about that credit card? Transfer spending money into a chequing account for your child. It's safer - there's only so much money they can spend - and it will help them understand ATM and standard banking fees.
3. Put your kids to work. A part-time job is a great way to learn some independence and responsibility while still living at home. Starting a job at an early age helps teens appreciate the value of a dollar and promotes smart spending habits. (And why not have teens contribute to their college education?)
4. Set a minimum budget. So many young adults live paycheque to paycheque because no one ever taught them how to budget. Help your children figure out how much they need for the basics. Whatever's left at the end of the month is theirs to blow.
5. Encourage cash. When you pay with plastic, your wallet never gets any lighter. By getting your kids to spend a real cash allowance, you help them to learn quickly how much things really cost and to limit their spending to what they earn.
6. Watch what they spend. It's hard to find the balance between cool parent and responsible parent. However, by watching where your kids spend their money you can help them save. If they're spending $100 a month on fast food, for example, and you show them what they could have purchased for the same amount, they may change their habits.
7. Have them create goals. Saving for the purpose of saving isn't that exciting for kids. If you agree on a goal, such as a new iPad, and you offer to match what they save, they'll learn not only the benefits of saving but also how to be smarter with their money. If they choose to blow the money before reaching their goal, they'll also learn something: no iPad.
8. Set a good example. As they start making money, many teens are going to use their parents as a reference for what to do with that money. If you're having financial troubles or aren't managing your own budget, why not establish some rules for yourself as well? Remember, you will always be your child's most important role model.