Do Your Kids Appreciate Money?

Parents holding a childs hand

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.


How To Stay Out Of Debt

Measuring debt

If you are one of the few people with little to no debt, count your blessings. Having no debt is not easy and what is even harder is staying out of debt. Take a look at a few ways that you can keep those finances in order and avoid getting behind.

Set A Budget

This is the best thing that you can do to stay out of debt. Write down an actual budget and stick to it. Far too many people just spend money as it comes in and never really know what they are wasting their cash on. You need to be able to account for every dollar.

As far as budgets go, you do not have to be that fancy. Just write out a list of everything that you spend money on. Include amounts for things like gas, entertainment and food as well. Use a basic spreadsheet program like most computers have or simply write it out an a scratch pad.

In addition to your normal expenses, you should also be allocating 10 percent of your take home pay to savings. If you can not do that, you need to cut some of your other expenses until you can . Without a proper amount of savings written into your budget, you will not stay out of debt for long.

Save For Emergencies

Now that you have that budget written out with room in it for savings, you need to start diverting money into an emergency savings account.

One way that people get themselves into financial trouble, is not being able to handle emergencies when they occur. One thing that most emergencies have in common is that they can be helped or completely handled with money. Open an emergency savings so that you can have the money when you need it.

When you open an account, choose an account at a bank other than your main bank. Preferably at an online bank. This will prevent you from being able to instantly transfer money to your account on a whim. Online accounts generally earn more interest as well.

Keep depositing into this account until you have at least 6 months, but preferably 9 months worth of expenses saved up. Once you are done, start pushing that savings money into a long term savings or an investment account.

Have Revolving Credit But Don’t Use It

Credit cards are a necessity for building a high credit rating. Without a few credit cards, your credit profile will lack diversity and your score will suffer. Unfortunately, those credit cards can be both a blessing and a curse.

It is all too easy to put something on plastic and let your expenses and credit card debt get away from you. It has been shown time and time again that people spend more money when they pay with plastic. Use your credit card as a tool to increase your scoreĀ  but do not become like the average American with nearly 10,000 dollars in debt.

Put your cards away and do not use them, even for emergencies, that is what your emergency savings is for. Only use your card once every 6 months just to keep the issuer from closing it. Then, pay it off immediately and put it away.

Add Extra Income Wherever You Can

Just because you are making enough money to live and even to save 10 percent does not mean that you should not be looking to add extra income. This is especially true if you are young without a family. We tend to get complacent and a bit lazy, especially in our youth when retirement seems so far away.

Money saved when you are young is far more valuable than money saved when you are older because of all the extra time it will have to accrue compound interest. So, make and save as much of it as you possibly can.

Simply picking up one retail shift a week can add over 5000 dollars a year to your income. Put that into an investment account with a modest rate of return and you could be staring at 75,000 dollars in 10 years time.

Don’t Try To Keep Up With Friends

Do your own thing financially. Trying to keep up with friends and co-workers, when it comes to spending, has led many people down the wrong path.

If you see your friends going out and buying new cars, clothes and all sorts of shiny things, do not try to compete. For all that you know, they might make considerably more money than you do. Even more likely though, they are swimming in a mountain of debt and will have to pay the piper some day.

Instead, live smartly based on your own finances. Treat yourself occasionally, but do so responsibly.