When it comes to money, kids today don’t really understand the concept. They understand that you use money to buy things, however, they don’t completely understand how you get money and they don’t understand how to save money. As a parent, is it your responsibility to start teaching your children these lessons and these skills at an early age. The sooner your children understand the value of a dollar and the importance of saving that dollar, the better.
Money Doesn’t Grow On Trees
Chances are you say this to your kids all the time, but they don’t understand the concept. When it comes to money, your kids see you put a card in the ATM machine and then they see money come out. They don’t really understand where it is coming from. When you go to the store, they see you swipe your debit or credit card in a machine and you walk out of the store with your purchases. It is important to explain to your children that the money that you earn at work is what makes the card work and that it just doesn’t come out on demand.
Make Your Child Earn Their Money
Since your children young, you can’t exactly send them out to look for a job. You can, however, create jobs within the home to give them a chance to earn their own money. Assign chores to your child and when the chores are complete, they can receive payment for all of their hard work. This is a great way to teach your child the value of a dollar and what it is like to work for their money.
Teach Your Child the Consequences of Overspending
When you child earns their allowance, you should let them hold on to their money and spend it however they want. You should ask your child what they are hoping to buy with their money. If it is something expensive, you should let them know that they need to save up. If they take their money on your next shopping trip and they spend it on candy, remind them that now they don’t have the money for the item that they really wanted. This will teach them to avoid overspending and wasting money on things that they really don’t need. They will likely be upset that they don’t have any money saved for the item that they really did want, however, it is a great lesson Chances are, they won’t be so wasteful with their money on the next allowance day.
Let Your Child See How Good It Feels to Save
If your child wants a new toy or a game, don’t just go out and buy it for them. Let your child know that they need to save their allowance to buy it themselves. When they have enough money, take your child to the store and let them pay the cashier themselves. They will never forget how good it felt to work for their money, save, and then pay for their item themselves. It is a great way to make them want to keep saving.
Teach Your Child to Keep Track of Their Money
It is a good idea to teach your child at a young age to start tracking their spending. They can use a notebook or the computer to note each time they get money and then each time they spend something. You should also give them a folder to hold their receipts. When you teach your children to track their spending at an early age, they will be better about spending in the future.
Have Your Child Create a Wish List
As adults, we prioritize where our money goes based on our needs. For example, if you have your mortgage and your water bill due in the same week, you will put a bill that isn’t due for two weeks aside and then pay the first two bills. This is an important lesson that you should teach your kids young. Sit down with your children and have them write down a wish list of things that they want to buy with their allowance. Next, have them number the items in order of importance. As they save their money, they can start buying things on the list from the most important to the least important. It is a great way to get them prepared for paying bills in the future.
Show Your Child the Benefit of Saving
Just putting their money in a jar won’t show your children the true meaning of saving money. You can use an interest calculator and pay your child interest each month on the money that they have saved. You can help them choose between junior isa vs ctf and guide them on how to save their money wisely. When you child sees that just by keeping the money in their piggy bank that they are earning money, they might want to continue saving. When they see the reward of saving, it is a huge life lesson.
Teach Your About Credit
It is important to teach your child about credit early on so that they don’t get into credit card debt as soon as they turn 18. To start, give your child a line of credit. If they want something that will cost $50, buy it for them and make them pay your back with interest. This will show your child that just because they didn’t pay for their toy up front, that they will still be paying for it plus the extra money for interest. Let them see how long it takes to get out of debt when they use credit. This lesson could make them want to avoid credit cards altogether.
Teaching Your Child About Budgeting and Saving
At least once a month, you should get your child in on the entire grocery shopping process. This includes having them help you make the list, go through the store’s weekly circular, clipping coupons, creating a budget, and going shopping. It will give your child a chance to see how the entire budgeting and shopping process works. When you get your receipt after you cash out, be sure not to forget to show your child the section that shows how much money you saved on that shopping trip. It is a great way to teach your children that if they take the time and create a budget that they can save money in the long run.
Start a Business
Helping your children start a business is a great way to teach them about making money in the future. They could sell lemonade, start a landscaping business and work on the neighbor’s yards, or start a cleaning business and do chores for the neighbors. Running a business is a great way to teach your child about financial responsibility and work ethic.
There are many financial lessons that you need to teach your children over the years. If you start teaching them early, the lessons you teach the will become a way of life.