You might think that managing money is an adult skill and therefore you don’t need to spend too much time teaching your kids how to get to grips with the financial side of life, but then how are they going to know what to do when they are in fact adults? If you don’t want your kids to make poor financial situations when they head off to college, start working and have access to credit all of their own, then you need to start teaching them about money management right now.
How exactly do you do that? Here are some simple steps you can take that will teach your children the basics:
Set a Good Example
You might not think so, but your kids will learn a lot about money management by watching you. So, if you’re in over your head, get help dealing with debt or if you tend to spend money without thinking about it, create a family budget. The more sensible money decisions you make, the more likely your children are to behave sensibly when they are old enough to be in charge of their own financial affairs.
Make it Clear That Everything Costs Money
A lot of young children simply do not realize that things cost money. They are used to being provided with whatever it is they need, soundless you make a point of telling them how much it cost and how you earned that money, then they may find it difficult to grasp the concept of cash.
Give Them Money to Manage
Giving young children an allowance is a great way of getting them used to money management from an early age. If you want to stand them in good stead for the future, make them do a few simple chores in return for their allowance and encourage them to save at least a percentage in a piggy bank or even a child’s bank account by explaining the benefits of doing so.
Get into Budgeting
Even if your child is only ‘earning’ $5 each week, it’s worth getting them into the habit of budgeting. Sit down with them and ask them what they would really like to own. If it’s a game that costs $40, explain to them that it will take them 8 weeks to save for that game if they don’t spend any of their allowance, then go through other options, such as spending a couple of dollars on candy and saving the rest, so that they begin to understand that managing money is about making difficult decisions. AS good way to do this is by purchasing several jars for piggy banks and giving them each a label such as ‘new game,’ ‘candy,’ ‘bowling trip’ and letting your child decide how much to put into each pot.
Give Them More Control
As your children grow into teens, give them an allowance, but let them know that they’ll have to pay for their own gas, cell phone plan, cinema trips, etc., themselves, This will throw them in the deep end, but it will help them to learn how to manage their money more wisely in the end.
Do you have any good ideas for teaching kids about money management?
