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How to Teach Kids About Money

Cruise for Bargains: Once your child is old enough to comprehend addition and subtraction, occasionally turn a trip to the grocery store into a scavenger hunt. Give her a short list of items that could total around S25. Beside each item, list a reasonable nonsale price -- say, S3 for a gallon of milk. As you shop together, challenge her to find each item under the specified dollar amount. The extra incentive here: She gets to keep the money she saves -- but has to put back treats if she goes over. To add another layer to this activity, go ahead and buy two differently priced brands of the same item and do a blind taste test. Is one really better than the other? If so, is the difference in quality worth the cost?

National PTA president Chuck Saylors put this idea into action with his own family: "When my son Tyler went into the ocean with his iPod in his pocket, we told him he was responsible for replacing it. So he saved his allowance -- and decided to go generic. After he bought it, he said, 'Dad, this one works just as well!'"

Price the Urge to Splurge: The price of a bag of popcorn at the movies is many times what you'd pay if you popped at home, and the ice cream cone from that cute roadside stand is easily twice that of the home-scooped variety. You pay the higher amount, of course, because you want it right now. Try this exercise in delayed gratification: Next time your child begs for a cone while you're out, offer to pay him SI if he instead has a scoop at home, and explain that he'll be pocketing the savings. It's a true-consequences approach to teaching your child the cost of impulse buying. And if he still decides to go for the treat, take it in stride. He'll be doing what we all do occasionally -- indulging an impulse.

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