4 Ways to Help Kids Make Cents of Finances

Contributed by our guest blogger, Joanne Soyack -  Director of First Impressions at C.H. Edwards, Inc.

Financial literacy is as important as learning the ABC's. By teaching financial and entrepreneurial practices at a young age, children will be better prepared for their financial futures.

The first step is to get started, so start with these educational activities:

Start Talking: Try a simple question such as, "What is investing?" Questions are conversation starters and shouldn't be complicated. The key is to teach through open communication that allows kids to discover -- rather than be told -- the answers.

Starting Thinking: Most kids are impulsive and fixate on things that are interesting. It's tough to get them thinking beyond "now" when it comes to money. Overcoming that helps kids understand the basic principles of budgeting. Challenge them with questions such as, "Are you still going to want that expensive sweater in a month, or would it be better to save toward something else?" Helping kids grasp the concept of "value" instills a sense of financial ownership and responsibility. Remind them that once they spend the money, it's gone.

Start Practicing: Kids learn through repetition. The more they do something, the better they get. No matter what age the child is, present her with scenarios that require practicing different financial principles. For example, during the summertime give your child $20 to set up a lemonade stand. Ask her, "What types of products will you need to buy to make lemonade? How much will those items cost? How many days do you plan to have the lemonade stand open?"

Asking these questions will not only help her work through the answers, but will also increase her understanding of simple business terms such as "overhead" and "profit." Additionally, contributing more "investment" money to the fledgling business opens up dialogue about investors and stocks. It takes a little imagination to come up with scenarios, but it can be a fun learning opportunity for the child and the parent.

Start Investigating: The Internet provides a wealth of financial learning tools for children and parents. Of course, parents should monitor what their children are viewing online, but there are some invaluable educational sites, such as www.smckids.com, which features webisodes for Secret Millionaires Club (SMC), an animated series starring Warren Buffet as he mentors a group of kids.

Featured on The HUB network, as well as the website, the SMC series is an innovative way to teach sound financial and entrepreneurial practices to young people. Modeled after the lessons instilled by Mr. Buffett in the animated series, SMC's "Learn & Earn" Promotion -- sponsored exclusively by www.creditreport.com -- also offers interactive educational tools for parents and kids.

The bottom line: Stop waiting. It's never too early to start teaching financial lessons.