Teaching Children About Money
Why Teaching Children About Money is Important
Teaching children about money and how to manage it early on will prevent them from having to go through the debt vortex so many Americans find themselves sucked into. Schools are lacking in any real, useful knowledge about money management so the responsibility is on you to teach your children.
The earlier they learn the more comfortable and wise they become about personal money management for kids. Be proactive in teaching your children about money as well as your grandchildren.
Children are old enough to begin to learn about money when they are old enough to ask for things like candy or toys. Make sure that what you teach them is age appropriate. While it is never a bad idea to let them look over your shoulder as you are comparing flight fares and hotel rates, keep their lessons fun and light. Make sure their money lessons can be applied and used in their life.
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Consider this time to be laying the groundwork for future money management success. Every child has daily chores. You can be teaching children about money lessons in their chores in the following ways.
Teaching Children About Money & Money Management Is Critical
- Allowance 411. Children need money in order to learn how to manage it properly. When children earn something for their work, they also gain a sense of accomplishment and responsibility. Pick an amount that you are comfortable with giving them. Small children are happy to have $1, while older children may expect more. Make sure you show that you value the work your child is doing.While it may be difficult, do not set restrictions on what they can spend their money on. They have to understand the consequences of spending money on junk. They will get tired of wasting their money sooner or later. Make sure they are aware that when their money is gone, they will not receive any more until their allowance rolls around again. Do not give in and give them money before their allowance. Sometimes it takes a little suffering to make wiser decisions.
- Start saving. Children should learn the value of a savings account early on. Getting used to the saving aspect right from the start will avoid so many financial mistakes down the road.Open a savings account with your child. If they have a particular goal in mind to spend their money on, explain that the savings account will keep their money safe. Give children the exact dollar amount their goal is going to cost and set a time frame when he or she will need to reach their goal.Help them figure out how much they need to put into savings each allowance period. Make sure that amount is deposited into their account. Give your child a small notebook to track their growing savings.When their goal is met, take them to the bank to withdrawal their money. Celebrate their money management success. You can even reward them if you would like. It is important that children have a positive anchor, or association, with saving money and meeting financial goals.
- Let children help you pay the bills. They will make the association of bills with getting to spend time with you. The more positive thinking you can create around money management, the fewer money hurdles your child will have later in life.Allow your child to look at bank statements, utility bills, and even a credit card bill. Explain to them ways how to manage your money better. When they get to peek into the adult world of money management, they have a more informed view of the real world. Being grown-up is not all about doing what you want like children think. Allow them to see that being grown-up carries responsibilities. Stress the importance of always taking care of your responsibilities. Make sure children have a true understanding of income and expense.
It is truly my hope that the children growing up today will not fall into the same debt trap so many of us did. Make sure you are a good example by showing how to manage your money by teaching children about money. Children learn more by observing than by verbal teachings. You can also set up money activities for kids to generate more interest.