What To Tell Your Kids About Money - The 7 Essential Lessons (cont'd)

4. Encourage one-third savings, one-third donations, one-third spending.

The exact proportions in which your child divides their money are up to each individual family to decide, based on their beliefs and the needs of the child. This can quite easily be achieved by providing them with 3 piggy banks or moneyboxes - one for spending, one for saving & one for donating.

5. Avoid borrowing money wherever possible.

It is always much harder to repay money that has been borrowed, than to save your money. Some loans, such as home loans, tend to be unavoidable though. A good rule of thumb is if you don't have the cash to buy it, you can't afford it!

6. Money isn't your best friend so don't let it control your life.

Quite simply, try not to become so over committed with your finances, that you are forced to work 60 to 70 hours a week to continue the lifestyle. If you do, then you are letting the money control your life. You don't usually need the fancy car (and car loan) or overseas holiday (and personal loan). All these things are nice, but only if you can easily afford them!

7. Show them how to budget & live within their means

This is one of the most important skills that your child must know, that so many people don't seem to know how to do. Recent surveys have shown, that many people are spending 10% to 20% above what they earn. They are earning enough money to fund their lifestyle, but they simply aren't budgeting it, and so are wasting large amounts of money each week.

With these seven lessons under their belt, they will be off to a good start, but there are many more money skills that your child will benefit enormously from learning. Visit Kids Money Tips to find more simple tips & tools, along with fun worksheets, printable charts & exciting games, you can use to help your child manage their money more effectively.

Rachel Incoll is the author of Kids Money Tips. She has helped show thousands of parents how they can teach their children everything they need to know about money in just a few simple steps. Visit her site http://www.kidsmoneytips.com to find out how your child can learn to save & manage their money more effectively. Sign-up for her free newsletter, & receive 10 bonus worksheets.