Want to teach your kids about money? Well, you’re not alone. Teaching children about the value of money is an important life lesson that many parents want their children to learn.
Money can be a confusing topic for kids. After all, it doesn’t always have a physical form and is often talked about in vague terms.
Generally, parents want to teach their kids about money because they hope that by teaching them the value of a dollar, they can help shape their future financial success.
Teaching your children about money is an essential step in preparing for their future, and it doesn’t have to be complicated. In this article, we will discuss five easy ways that you can teach your children about finances.
1- Teach them the value of money from a young age
If your kids start to understand money at a young age, they will be more likely to appreciate it and not want so much of it. Think about how you are saving and investing for kids college tuition, for example.
Your child would have the same ideas when he starts working later in life. This is an opportunity for parents to show children the value of savings early on rather than allowing them to get into credit card debt when they get older.
2- Encourage them to earn their own money and spend it wisely.
When you are teaching your kids about money, it is important to earn their own cash. This can be done through chores around the house or by having a lemonade stand in the front yard come summertime.
Get children thinking more about saving up for bigger things they want instead of buying each time something new comes out at the store.
Consider allowing them to work outside school hours by tutoring younger students or babysitting family friends’ young ones after school.
As long as you set some rules beforehand (such as no animals), there shouldn’t be anything wrong with this idea.
3- Create a budget together and establish goals for saving and spending.
If you want your child to understand money better, he must get involved in the saving and spending habit early on.
Sit down with him every so often and create a budget together where he can see what percentage goes towards savings for college or retirement, the bill portion of the monthly expenses, along with discretionary funds set aside for clothing or entertainment.
You could also take this time as an opportunity to establish short-term goals like getting new shoes before school starts again next year instead of waiting until after summer vacation when they are already too worn out from being outside all day during playtime.
These examples show children how important it is to know where their income goes and how to balance it between spending and saving.
4- Set up a savings account for them and show them how it works
If you are serious about teaching your child how to handle money, having them set up a savings account of their own is crucial.
This can be achieved by opening one together with an initial deposit made on his behalf to feel more invested in the experience.
At some point within the first year, sit down and show your child what interest rates do to an annual balance and any fees that could go along with it depending on where the bank or credit union decides to house it.
Seeing this process firsthand will give your son or daughter real-life examples of why they should save whatever amount possible for short-term goals.
5- Make sure your kids know how credit cards work and that credit card debt isn’t a good thing
One of the most important lessons to teach your kids about money is how making purchases with plastic can be dangerous if not used correctly.
If you want them to understand this, parents need to make sure they know what interest rates are and why using one could come back as an expense at some point down the line, depending on their payment habits.
Most importantly, though, don’t let yourself get caught up in training your children from a young age; how easy it is to spend someone else’s money because it doesn’t feel like our own.
This concept alone has led many adults into bankruptcy before turning forty years old since their mindset was always focused on getting something new instead of saving up.
6- Allow them to have a budget for spending money
After you’ve taught your kids about how credit cards work, the next logical step is allowing them a little wiggle room with their own allowance, so they can make purchases now and again on things they might like now that it doesn’t necessarily come out of mom or dad’s wallet.
It could be something as simple as candy bars at school over a lunch break or even saving up to buy new sneakers before basketball season starts.
Whatever the case may be, allow your children some leeway regarding what gets purchased but don’t forget to mention right off the bat that making impulse buys will only set them back further when they have fewer savings than planned.
On the other hand, if he goes over his spending limit for the month but knows how to save money regularly and doesn’t break any of your established rules at home, then an allowance increase is always a possibility.
If you want to teach your kids about money but don’t know where to start, there are plenty of resources online or even at local banks willing to provide seminars if requested ahead of time so all family members can leave knowing what needs to be done.
Teaching your kids about money early on will only help them in the long run. If done correctly, this could lead to great financial habits throughout adulthood, which any parent would want for their child no matter what age they are now!