In today’s tumultuous economy, it is more important than ever for parents to teach their children how to be financially responsible. Money has to be earned and budgeted before it’s spent, and let’s not forget the importance of continuously saving money for the future. Communicating this to your children is essential to helping shape the financial decisions they will make later in life.
That said here are some helpful tips for raising money-smart kids, at an early age.
Open Up a Savings Account
Has your child been asking for a special toy, a bicycle, a video game? Open them a savings account at your local bank. Discuss how much they will need to set aside to reach their target, on a weekly or monthly basis. You can also explain how a savings account works and how he or she can earn interest on money that is deposited. This is often a nice motivation for your child to use the savings account. You may find that your child uses the account to set and reach a financial goal, which is a great thing to watch.
Let them Earn Allowances
Once your child reaches an age where they can start contributing around the house, you can pay them a small amount of money for helping out. Whether it’s taking out the garbage, watering the plants, or helping with dishes, you need to show them that they have to work for their money. It doesn’t just grow on trees. This is a small amount of money that you give the child for spending on just about whatever he or she so desires. By giving your child an allowance, your child will come to realize the value of a dollar when it comes time to make decisions about what to buy.
Get Your Child Involved
If your child is old enough, you can teach him or her a financial lesson by sending your child on an errand to pick up some groceries. Give your child $20 or so along with a list of items that you know will cost very close to $20. Your child will then have to carefully consider how to make that money stretch to get all the groceries you need. If your child is successful, consider giving him or her some kind of reward.
In order for children to grow up to be financially responsible adults, it is important that parents begin teaching them about how to manage money as early as possible. If you have been putting this off with your own child, then it may very well be time to reconsider.