Ever wondered how to teach your kids about money? It’s never too early or too late to start! Learning how to be smart with money is a valuable life skill that your kids will need later down the road. There are so many factors that come into play with money, like when to spend it and when to save it, how to build credit, or get out of debt, and whether or not you should invest, just to name a few. To learn how to teach your kids about money, please keep on reading!
1. Don’t Give an Allowance
Knowing how to teach your kids about money is a valuable thing. Try to avoid giving a monthly allowance! Instead, have your kids do chores around the house to earn their money. Even preschoolers and kindergarten age kiddos can be paid to do simple chores like helping clear the table or picking up toys. Older kids can help clean bathrooms, fold laundry, and sweep. Teenagers can take out the trash, mow the lawn, babysit, and wash dishes. Pay according to your discretion, but don’t be too stingy!
2. Use Everyday Situations as a Learning Tool
Trips to the grocery store can be a great learning experience. You can teach your kids about comparing prices for the best value, adding up your purchase as you go to stay under budget, and how to use coupons to save money. Even cooking dinner or putting gas in the car can be a way to learn about money. Using leftovers creatively or searching for the best price in gas can become a game if you make it fun!
3. Start a Savings Account in Your Child’s Name
Most banks don’t charge for you to open a savings account for your child! Find out your local banks' policies on savings accounts for minors and discuss the responsibility with your child. You could set a limit for the minimal amount of money they would need to put into their savings account per month.
4. Encourage Your Kids to Set Goals
Talk with your child and find out what his or her expectations or assumptions about money are. Encourage them to set a long-term goal, such as saving up for a car or college. For younger children, a long-term goal could be something like a new electronic game or a summer camp trip. Discussion is the best way to open your child’s mind about money!
5. Don’t Demand Your Kids to Pay for Basic Needs
If you pay your kids for chores or give them an allowance, don’t demand that they use that money to pay for basic needs. Toothpaste and school supplies are a responsibility that you as the parent should shoulder. If there is something your kids want, but don’t necessarily need, you could encourage them to save for it, or offer to pay for half.
6. Teach the Value of a Dollar
Something that many children overlook these days is the value of a dollar. If your child works to earn a little pocket money, or uses his or her own money to pay for something, the chances of that item being well-appreciated and cared for go up by 50%. Older children can pay for part or all of their own car insurance if they have a job. Younger children can save up or help purchase new toys or gadgets they would like to have.
7. Balancing and Budgeting
Don’t forget to teach your kids about balancing and budgeting! It’s never too early to start. Learning to balance a checkbook and create a working budget will be something that is important later on in life. If your child has their own savings or debit account as a teenager, learning how to responsibly handle it should be at the top of the list of things for you to teach them!
8. Don’t Lose Your Patience
Above all, remember that kids will be kids. They are bound to make mistakes or misunderstand some things when it comes to money. Try to be patient and understanding, and just stick with it. Sooner or later you will make progress!
These are my tips for teaching your kids effective money management, and if you apply them, and stay consistent, you will be helping your child learn financial responsibility! How did you learn about money smarts? Please share your tips for teaching kids how to manage money, and thanks for reading!