If your children earn an allowance, shift more spending decisions to them. This reduces the need for them to ask for money and encourages wise spending.
Let children decide
Set up a three-jar system for spending, savings and sharing. Together set goals for the money in each jar. As your children earn or receive money, they can decide how to divide their money among the jars.
One approach: Children might use money at their discretion, but only for the purpose intended (can't spend money intended for savings).
Another approach: Money goes into action only when a jar is filled up. Deposit a jarful of money into a savings account, use it to make a purchase or make a charitable donation.
Eliminate the "I wants" at the store checkout by allowing children to spend only their own money when they go shopping with you.
Avoid criticizing children's poor money decisions. Let children decide how to spend their money, but help them evaluate the results. If they regret a decision, help them focus on what happened and what was learned. Make it a point to praise responsible behavior.
It is better that children learn money management under your guidance than alone in the real world. Learning from a rash $10 purchase is easier than learning from a rash $10,000 purchase.
And when children ask to borrow money from parents, treat them like a bank treats its borrowers. Parental loans should come with interest and repayment terms and should require some collateral. Let children learn that it is expensive to rent someone else's money for a period of time.
Occasionally express your desire to have things you can't afford. Children need to hear that you, too, have to tell yourself "no" to spending money.
Wants versus needs
Teach the difference between wanting and needing. For an older child, create a list with three columns - needs, wants and wishes. This comparison helps children see that the three do not go together.
Delay a child's spending by requiring comparison shopping, a list of pros and cons for the purchase, and thrifty alternatives. Point out that children keep the money they save from finding low prices or inexpensive alternatives.
One important lesson is how to track earnings, spending, and savings in order to know how you're doing financially. Ask your child to write down transactions into specific categories each month.
Another method for learning about money is to use the grocery store as your classroom. Demonstrate how to plan a meal, use leftovers, shop by unit price, question coupon or sales values, figure costs of eating out (including tax and tip), and ways to create low-cost options.
Sometimes the best motivation for wise spending is to plan how to do more with the money you save.
Lynn Little is a family and consumer sciences educator with University of Maryland Cooperative Extension in Washington County.