Fundamental Tips On Teaching Your Children About Money
Definitely, most of us can today look back at their childhood and wish they could have learnt about money while they were still kids. Most people today graduate from the college without proper knowledge of how they will manage their money or balance their bank accounts. I guess you are one of them! Take your time go through the ways in which you can teach you kids about money to avoid making them be in the same situation you are currently when they grow up.
1. Always Use a Clear Jar to Save
Using the piggy bank is always a great idea though it does not have to provide the kids with any visual. When you save on a clear jar, the kids will always see the money growing and getting more with time. For example, yesterday they had a dollar bill and four dimes. Today they are having a dollar bill, four dimes and a quarter. Take your time and talk them through making a big deal in the process.
2. Ensure You Set an Example
The little eyes of your kids are always watching you! If you are fond of slapping down the jar each and every time you are going out for dinner or going at the grocery to make some purchase, they will always notice and keep it on their minds. If you together with your spouse are arguing about money ever month, the kids will always keep not of that. You need to set a good example to them and they will definitely follow that when they get older.
3. Let Your Kids Know Stuffs Do Cost Money
Do not just come home with a new pack of toy and tell them the toy costs $ 5. It would be great if you can grab some few dollars from the saving jar and take the kid with you to the store and physically hand the money to the cashier as they watch. This action will be of greater effect to the kids than just giving them a three-minute lecture.
4. Show Opportunity Cost
This could mean if you give the kid an option for example if the kid goes for the video then let him or her know that you will not have money for the other pair of shoes. At least your kids should be able to weigh decisions and realize that each of the decision they take can have a consequence.
5. Always Give Commissions and Not Allowances
Refrain from giving your kids money just for breathing. Instead, you can opt to pay them commissions based on the duties they have successfully accomplished around the home like taking out trash, mowing the grass and cleaning their room. This will help your kids understand that money is always earned and not just issued.
6. Always Stress the Importance of Giving
When your kids have started making some money, you need to teach then on the importance about giving. They can always pick a charity, a church or someone who is in dire need of help. This will make them understand who money affects the people they donate to and affects the giver as well. Your kid has now grown and is now a teenager. You need to take your teaching a notch higher too.
7. Assign Them Responsibility of a Bank Account
You should be able to set your kid with a simple bank account by the time he or she is a teenager. This will enable them to take their money management to another level and will be preparing them for managing an even heftier account balance as they grow older.
8. Try Helping Them Get a Job
Teenagers always have plenty of free time for example, the summer break, the fall break, spring break and winter break. If you teen is in need of money, then it would be great if you try get some job for them where they could be paid after working. This is important especially when they are in college. They will definitely know that working is a great way of making money.
9. Educate them on the Dangers Associated with Credit Cards
Immediately you kid turns 18, they will definitely get hounded by the credit card salespersons especially when they are in college. If you failed to teach them on why debt is a bad idea, they will be definitely become credit card victims. You can decide to start teaching some of these developments much earlier depending on the development of your kids.
10. The Dime Challenge
Have you ever thought of how much you will be able to save by feeling a two-liter soda bottle with dimes? Depending on how the coins land inside the bottle, you will roughly end up with $500 or $700. The dime challenge is a fun way of educating your kids on the value of coins and teaches them on how they can always save for something special. For example, you can say that in the family, we always save the coins for the Disney World.
11. Award them with Interest Based on Their Savings
This will motivate your kids to always keep their allowance on their piggy banks. Try giving them interest depending on what they are saving. A maximum of 5 % of what they are saving should be enough if you can afford it. This will not only teach your kids on the concept of earning interest but it will also encourage them to be able to control their impulses to spend.
12. You Can Use Cooking to Educate Them on How to Budget
Planning for meals and shopping for ingredients at the store is the best way you can always use to educate your kids on how they can always shop smart and eat healthy. Try making it a game to find who can get the best prices of items on your list whenever you are at the store with your kids. On the night when you are out with your family for a dinner, make it a habit of comparing the prices of dishes listed on the menu to remind them of how much they can always save when they opt to eat at home.
13. Have a no Money Day
Try getting everyone to come up with fun ways on how you can spend the entire day without having to spend money. In case you are in need of preparing meals, only find recipes based on what you already have at the pantry and for family events, try look for the free events around the neighborhood.
14. Clear the Clutter
Most researchers have found that the kids who have lesser toys are always more creative, take good care of what they have and enjoy writing and reading when compared to the kids who have many things to play with. So make it a habit of donating or selling toys they never play with anymore. It will educate them on letting go and encourage them to try finding other ways they can entertain themselves with lesser toys.
15. Spend Time Reading With Them about Money
As soon as you kid known how to count, you can start spending some of your time teaching them about the value of money. Get books such as “A Dollar for Penny” by Julie Glass one of the favorite books about counting coins “Rick, Brock and the Savings Shock” by former FDIC Chair Sheila Bair which teaches our toddlers about spending and saving. Some other great reads from the elementary school include “How to turn $100 to 1,000,000” and “Dr. Seuss’ One Cent, Two Cents, Old Cent, New Cent”.
Right Time to Talk To Your Kids about Money
Educating your kids the value of money by using real life situations and examples will enable them to where money comes from and how to earn it. Here are some few great examples you could also use on your kids.
At The ATM
ATM is one of the best places where you can start teaching your kids about the value of money. You could take some time before you withdraw and explain how the ATM holds you money that you have worked for. Let them know it is not just a hole where money comes out! Let them know that whenever you take some money from the ATM you will have less left.
At the Supermarket
When you are purchasing items at the supermarket, you can take your time and explain to your kids how the items are prices and you can always get same products at cheaper or higher prices. This will help you teach them on how they can always hop for the best prices.
When you receive bills on your email, try teaching kids the Internet connection and the electricity costs money. You can explain to them that you worked for several days in order to be able to pay for the electricity bills. This will also teach them on how they can help reduce the bills by not leaving the lights open and appliances on.
Doing a Budget
You can always involve your kids in discussions about family budget. Let them try making some choices. This will give them a wide picture about the spending and costs. By explaining to your kids how much money you have to spend as a family in a week, your kids will be able to understand how much they can always save for other things.
Giving Pocket Money
Pocket money can help kids better understand the value of money. Give them a certain amount and duration till when they should use it. In case their pocket money is over before the end date, ensure you make them understand what it means and when the date ends when their pocket money is not yet complete, award them.
Advantages of Teaching Your Kids about Money
- It will prevent impulse spending
- Their decision making abilities will be enhanced
- They will learn to be Financial responsible
- They will learn the value of goal setting
- It will improve their chances of being financially secure later in life
- They will always be money conscious
If the kids are able to develop better financial skills from a tender age, they will always be ready to face financial challenges during their adulthood. Educating your kids about money matters will be critical to their development and will provide them with a great foundation. It will also enable your kids to practice good money habits when they money basics such as having a budget and saving. Always let your kid enjoy to learn more about money and how they can use it.