How to teach kids to save money, spend it wisely

HOUSTON Experts say a child is never too young to learn good management skills. The key is parents need to set the example so that this holiday season, it will help your wallet and your kids' piggy banks.

At "Kidtroplis" at the Children's Museum of Houston, kids really get to run their own city. With its own city hall, bank and grocery store, it's a great place for kids to role play.

"I have actually gotten him the play money," mother Nancy Marcos said.

Three-year-old Mathew Marcos doesn't know it yet, but his parents are already trying to teach him good money management habits.

"He thinks that everything, he can just ask for anything and get it," Nancy Marcos said. "That's not how the world is, and I just want to be a little bit more cautious now."

But Peyton Sancrent already has an idea. She's been saving her hard-earned allowance and birthday money for a new cell phone.

"Maybe $300 in the bank right now, and I have maybe about $100 in my piggy bank," Sancrent said.

"The sooner that children have to learn that they have to work for a living, the better it is," financial expert Marilyn Logan said.

Logan, who's known as The Money Lady, says a great way to visually teach kids about money is to keep it simple. She suggests labeling four envelopes.

The first one should read "save."

"Our economy is in the situation we are in because we focus more on spending," Logan said. "Spending still an 'S,' but saving -- it should be saving," Logan said.

The second envelope should be labeled "give."

"Giving things away, helping somebody else, because the world is much bigger than me, me, me; you need to teach children us, us, us," Logan said.

Logan says the third envelope: "invest."

"If they want to buy the latest tennis shoes, allow them to invest in the tennis shoes before they start wearing the tennis shoes," Logan said.

Finally the fourth envelope: "spend."

Logan says by teaching kids to save, give and invest, when it comes to spending, they think twice.

"They don't mind spending if they have done this part. This is the work and this is the fun," she said.

That's why Sancrent says when she buys something, she wants to make sure it truly is worth it.

"I make sure that I know what I am spending it on. I make sure that it's good," she said.

For the long-term saving, Logan says it's a good idea to put money in a savings account. But for the short-term, Logan thinks it's good for kids to see how much money they have in each envelope. It helps them think a little bit more on what they really want to spend money.

Visit Marilyn Logan's website to find out more about her and her money saving strategies.