In the last 20 years, the American childhood experience has undergone dramatic changes. Thanks to technology, we see new opportunities for learning, developing and innovating. Take tablets, smartphones, video games and laptops for instance. Even the youngest of today's adults didn't have these types of gadgets until they were older. In two decades, we witnessed a fundamental social transformation. (For related reading, also see Opening Your Child's First Bank Account.)

TUTORIAL: How To Manage Credit And Debt

Unfortunately, that transformation has created new challenges for kids of this new millennium. When we were kids, there was no Facebook and social media for cyberbullying to happen. Education was less expensive, student debt numbers were lower and there was less pressure to develop a strong technical background. As much as we do our best to relate to our kids, we need to find a way to bridge the gaps, especially when it comes to their developing personal finance habits. In many respects, we can return to the basics, but in others, we need to leverage today's technological climate. Here are seven tips for financially empowering your kids:

Give Them Ownership Over Their Savings
Help kids develop a strong command over the money that they save and spend. Teach them about maintaining a healthy balance of cash-in and cash-out, and create an age-appropriate allowance system. When your kids become young teenagers, encourage them to start reading personal finance blogs, and have open conversations about trending topics. Eventually, you can also help them enroll into a service like Mint.com, where they can manage cash, credit cards and investment accounts from a computer or smartphone.

Show How Their Savings Contribute to the Family
If you're an avid coupon clipper, ask your kids to help on a regular basis. Bring your kids on your shopping trips, and make sure that they see the register come checkout time. See how much you save, and ask your kids to help plan fun activities as your savings continue to grow. Again, you can help your kids find blogs to read for inspiration.

Give Them Valuable Jobs
Instead of paying allowance, pay your kids an hourly wage for tasks around the home. You could also pay them on a task-specific basis as an alternative. Empower them to learn early on that hard work pays off and that rewards are valuable. Eventually, give them jobs that actually contribute to savings around the house like clipping coupons.

Teach Them "Why" in Addition to "How" and "What"
Today's kids are inquisitive, and they have a hunger for understanding the big picture. Kids like to be able to connect what they're doing to a bigger picture. This intellectual skill is one that is valuable for the long-run too. Over time, they will start to understand the "why" on their own, without a prompt.

TUTORIAL: Banking

Encourage Them to Volunteer
Teach them the value of hard work outside of your home. Volunteering is one of the best ways for kids to interact with supervisors, mentors and peers. They'll develop key skills from an early age that will help carry them far. Above all, they'll develop important values for collaboration and social good. These skills are invaluable when learned early.

Leverage Their Imaginations
Kids have amazing imaginations, and are truly inspirational sources for creativity. Help them learn to embrace and channel it. When we're adults, our imaginations seem to fade to gray. Help them keep their minds alive by bridging the gap between imagination and reality. Personal finance subjects provide a great place to start.

Let Them Voice Their Perspectives Regarding Major Decisions
Kids are smart, and they will surprise you with their smarts. As they grow older, ask their opinions about financial decisions that you're making. Ask them what they think is the best course of action, even if you're confused. Remember to be age-appropriate, and remind them that ultimately, as an adult, you have the final say. Regardless, it's important for kids to learn how to handle important decisions, and they'll learn best from observing your thought process. Soon enough, your kids will be adults who need to make these decisions too.

The Bottom Line
The kids of this millennium have a world of opportunity ahead of them. Because of technology, they are living through experiences that we adults could not have imagined. Ultimately, we need to teach kids how to learn and to navigate some of these channels themselves. Money is one place to start. (For additional reading, also take a look at 5 Financial Lessons You Must Teach Your Kids.)

Related Articles
  1. Personal Finance

    Want Your Will to Prevail? Don't Die Intestate

    If you die without making a last will and testament, you are said to have died intestate. What happens to your assets in this case?
  2. Retirement

    Do Wealthy Parents Raise Wealthy Kids?

    Researchers are finding that it’s a lot easier to crack the top tier of income earners if your parents made it there before you.
  3. Investing News

    Stocks to Eye with China's One-Child Policy Ended (MJN, PG)

    Here are four stocks to consider in the wake of China ending its one-child policy.
  4. Professionals

    Top Ways to Reduce Money Friction in Your Marriage

    Bickering about family financials can get messy. Here are some ways to help resolve money issues and get on the same page financially with a spouse.
  5. Professionals

    Helping Your Teen Find Their First Job

    Parents can help their teens along the path to landing a first job with these strategies and tips.
  6. Personal Finance

    Are The Wealthy Better Served By Trusts Or Wills?

    Trusts and wills are both means to pass on wealth to heirs. Which of these is likely to serve your needs better if you have considerable wealth?
  7. Investing

    How Trust Funds Can Safeguard Your Children

    Certain types of trust funds can help to protect your assets from bankruptcies and civil actions, and can be established to safeguard your children and designated beneficiaries.
  8. Professionals

    What Accounts for One-Third of the Wage Gap (WMT)

    Women who work full time still make less than men who have the same qualifications. One third of the pay gap may be due to gender bias and discrimination.
  9. Budgeting

    6 Cost-Effective Tips for Raising Your First Child

    The excitement of welcoming your first child to your family shouldn't prevent you from making good cost-effective decisions.
  10. Investing

    Why to Buy Term Life Insurance with a Conversion Option

    Why you should always purchase a term life insurance policy that allows for an unrestricted conversion option.
RELATED FAQS
  1. Can my IRA be garnished for child support?

    Though some states protect IRA savings from garnishment of any kind, most states lift this exemption in cases where the account ... Read Full Answer >>
  2. How do alimony and child support factor into my taxable income?

    The Internal Revenue Service, or IRS, applies a different tax treatment to alimony than child support. Most forms of alimony ... Read Full Answer >>
  3. What are the differences between an annuity derivation and perpetuity derivation ...

    The differences between an annuity derivation and a perpetuity derivation of the time value of money is due to differences ... Read Full Answer >>
  4. What are some examples of common fringe benefits?

    The majority of employers in the private and public sectors offer their employees a variety of benefits in excess of stated ... Read Full Answer >>
  5. How can I start an IRA for my child?

    The Roth IRA is hands-down the most attractive retirement plan available for people with at least 15 or more years until ... Read Full Answer >>
  6. Can someone who is not yet of legal age open a brokerage account?

    An underage person cannot open a brokerage account on his or her own. However, it is possible for an underage person to have ... Read Full Answer >>
Hot Definitions
  1. Black Swan

    An event or occurrence that deviates beyond what is normally expected of a situation and that would be extremely difficult ...
  2. Inverted Yield Curve

    An interest rate environment in which long-term debt instruments have a lower yield than short-term debt instruments of the ...
  3. Socially Responsible Investment - SRI

    An investment that is considered socially responsible because of the nature of the business the company conducts. Common ...
  4. Presidential Election Cycle (Theory)

    A theory developed by Yale Hirsch that states that U.S. stock markets are weakest in the year following the election of a ...
  5. Super Bowl Indicator

    An indicator based on the belief that a Super Bowl win for a team from the old AFL (AFC division) foretells a decline in ...
Trading Center