Teaching Kids About Money Doesn’t Have to be Hard
Knowing how to handle money is an invaluable skill that, let’s face it, not even all adults have mastered. Do you want your kids to grow up with great money skills? Then start early when teaching kids about money. Help them develop healthy habits that they can take with them into adulthood.
Image Credit: Hobbies on a Budget on Flickr
Here are seven simple things you can do to get started right away.
1. Be a great role model.
Children are our greatest imitators, and you should never forget that they’re always watching. Don’t be a good role model, be a great one.
2. Don’t be afraid to talk about money.
Money is taboo in a lot of homes, and this is the wrong approach. Discuss money with your children, teach them the importance of balancing a checkbook, explain the spending decisions you make for your family. Make them as much a part of the conversation as possible and take advantage of every teachable moment.
Image Credit: Carissa Rogers on Flickr
3. Give an allowance.
Not everyone will agree with this approach, and it’s definitely a personal decision, but giving them a small amount every week for helping around the house or doing specific tasks really can be great practice for learning how to handle money.
There’s a difference between giving them money just because, and giving them money because they did their chores. By doing the latter, they learn that money is earned, which is a very important lesson.
4. Talk to them about saving.
Discuss the importance of saving with them and different ways to save, and let them see you deposit money into your savings account. Share with them the things you’re saving for: retirement, a special trip, college, etc.
5. Don’t lend them money.
If they want to buy something and don’t have enough cash, don’t help them out. This will teach them the importance of making the right spending choices. If they spent all their money on a toy or video game, they have to accept the negative consequences of their decisions. Show them how to weigh the costs of making a specific purchase.
Image Credit: Steven Depolo on Flickr
6. Don’t micromanage their spending.
Discuss their spending decisions with them, but let them make mistakes. This is a great way for them to learn about delayed gratification and opportunity costs.
7. Teach them about giving.
Giving is rewarding not only for the receiver, but also for the giver. Teach kids this important lesson early on.
Trent Ham, author of The Simple Dollar: How One Man Wiped Out His Debts and Achieved the Life of His Dreams and 365 Ways to Live Cheap: Your Everyday Guide to Saving Money, has a great idea for teaching a lot of these lessons in a tangible way.
Give your child four jars: one for spending, saving, giving and investing. When they get their allowance, have them distribute it as evenly as possible in all four jars.
They can use the money from the “spending” jar to buy whatever they want; the money in the “saving” jar should be saved for something they want to buy in the future; the “giving” jar’s contents should be donated however they see fit; and final jar, as you would expect, should be used to teach them about investing.
Image Credit: Family Treasures on Flickr
At the end of the day, there’s no shortage of strategies to use or advice out there for raising children that are financially savvy. Do whatever’s right for your family, and remember, it’s never too early to start!
What have you done to teach your kids about money, and what has or hasn’t worked?
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