Teaching Your Children
Teaching Your Children Good Spending & Saving Habits
Kids who know how to handle money have a great advantage in life, especially if they learn young. You can teach your children how to wisely manage their finances, even if you have money problems yourself.
Learning to Handle Money—The Sooner the Better
When it comes to teaching kids about money, the best advice is to start young. Young children are fascinated by money and what it can buy. Somewhere between the ages of three and five, you can begin helping your child understand concepts like value, having to wait, and saving.
Take your child grocery shopping with you and let them help you find items and read price tags. Make choices based on your grocery budget, and let your children know you are choosing to delay a purchase if you can’t afford it.
Giving your child a chance to earn money is another great way to teach kids about money. Try an art auction or set up a bidding system for special jobs or chores. At this early stage, it’s important for kids to understand that money is earned and “doesn’t grow on trees”, and that spending all of their money means they can’t have the things they really want.
Make learning to save fun by actively involving your child in the process. Kids love jars filled with coins. Label a jar for saving and another for spending. When your child receives money, earned or gifted, encourage them to split the money between the two jars. If your child can’t count yet, mark the coin level with a piece of tape, moving it up or down as the level changes as they spend or receive more money.
Grade School Money Management
Once your child is in grade school, it’s time to start practicing real-world earning, spending, and saving skills. Kids between ages six and ten have usually mastered basic addition and subtraction and understand value. If you want to give your kids an allowance, this is a good time to start.
An allowance gives kids the opportunity to set saving and spending goals and to practice their newly acquired money management skills. A savings account, opened at your local bank, can give your child a sense of accomplishment and provide an opportunity to practice self-discipline.
Meet together and discuss spending and savings goals. Help them attain their goals by holding monthly “money meetings” to discuss progress towards their goals and any problems they may be experiencing.
Financially Literate Teens and Parents
Your kids watch as you budget, save, and spend, learning as much from what you do as from what you say. In terms of money, this is especially true once they reach the teen years.
By now, your kids know if they don’t have the cash to buy something, they can’t purchase it. Debit cards are a good training tool, helping teenagers acquire the skills needed to manage their cash electronically. You can learn to control your debt if you adopt the same principles you have taught your children.
The best way to teach your children to manage money wisely is by example. Both you and your children will benefit as you work together, learning to use your money to reach your financial goals