A strong understanding of money and finances will set your kid up for life. Unfortunately, most parents neglect to teach their children about how money works and the value of money.
To do things right, you need to start early. You might think that your child is too young to be taught about money but think again. If your child is 5 years of age or older, it is time to start talking about money. Don’t worry, it is not as hard as you think.
Here are some places where you can start.
Set An Example
This is the most important thing that you can do to teach your kid about money. Believe it or not, they are watching you and learning from you all of the time.
If they see you buy whatever you want, they will do the same. If they see you price shop and save, they will do the same.
Try to make your child a part of your financial decisions going forward. No, they will not understand everything at first but it will gradually sink in.
When you get paid, let them watch you pay the bills. Show them how you put money into savings. When you go to the grocery store, show them how you price shop with coupons and purchasing generics. These are daily lessons that will serve them well.
Give Your Child An Allowance
Too often these days, parents just buy their kids whatever they want. The kids see you pull out a plastic card and they magically get everything they want.
If you want to spoil your children, that is one thing. You should not feel guilty about wanting to give your children things, especially if you worked hard for what you have. Perhaps you should change the way that you give them these things though.
Instead of buying them things, let them buy their own things with an allowance. If you want to spoil your child, fine, give them a hefty allowance. It changes things when they actually have to take out their own money and buy things. They still get what they want in one hand, but in the other hand, they see that they have less money. It will help to show them the value of the dollar.
To make things even more of a lesson, have them earn this allowance. If they have to work for their money, they will not throw it away as easily.
Teach Your Child To Save For A Goal
It is never to early to learn the power of saving money.
When you take your child to the store, let them shop with their new allowance. Show them what they can afford with the money that they have and what they do not have enough money for.
Then, introduce the concept of saving. Show them how the money that they have now can buy them little toys. If they want a big toy, they will have to save their money until they have enough. So, they can have a little joy now or a lot of joy later. Keep showing them bigger and bigger toys, that take longer to save for, as their saving discipline increases.
Show Them How To Save
For a child, the impulse is to spend their money just as quick as they can on what they want. They generally do not understand the concept of price shopping. Open there eyes and it will be a lesson that they never forget.
If they want a toy that costs $20, help them find it for $15. When they see that they have money left over when they were going to spend it all, they will remember. Soon, every time they want to buy something they will be asking you if there is a coupon for it.
Introduce The Concept Of Budgeting
At the beginning of the week, when your child gets their allowance, sit down and help them budget there money.
If they get 20 dollars a week, give them 20 singles and a few envelopes. Help them put a few dollars here and a few dollars there.
A child’s budget could be 2 dollars for candy, 10 dollars for toys, 5 dollars for a new app and 2 dollars for saving. Teach them to organize there money to meet there needs over the course of the week. If they come up short, it is a lesson for next week.
You can also use a budget worksheet like this one from Carrie Elle. It can help your child find the best way to use their money and teach them a little math as well.