Do your children think money grows on trees? Do they observe you pulling out your credit card for all kinds of purchases? Do they play games online and buy accessories or add-ons for avatars?
It is quite reasonable why your kids hold onto such a cliché, leading them to believe they can purchase anything they want without paying for it. The belief about waving a plastic card to purchase things is a severe problem. Therefore, teaching your kids how to manage their money requires you to lean onto some good practices.
When and where do kids learn about money-related issues, including financial responsibility, budgeting, saving, debt, and credit? Although some children learn about it in school, studies show that most children learn money management skills at home.
Therefore, as a parent, you need to act proactively and make substantial efforts to teach your children about money. In today’s article, we will give you some practical tips. Read on!
Your children must learn and practice money management. Teach the following habits daily to prepare them for “real” life. You can include these lessons in day-to-day errands or activities. However, you don’t need to take more time out of your schedule.
Discuss with your kids the differences between needs and wants. Your children can avoid many financial challenges if they understand it is impossible to accomplish everything they want in life.
Similarly, teach your kids that some things hold more importance than others. Teach your child how to prioritize things to achieve money management goals. Prioritizing can help your child make informed decisions daily, specifically about money management.
Financial experts recommend helping your children understand the concept of money management. For instance, tell your child that there is no such thing as free breakfast, lunch, or toy. If your child wants something, teach them about earning and saving money to buy it.
At the same time, let your children know the concept of debt and ensure they understand purchasing things without going into debt. Teach your children the value of working for money. For instance, they can do additional chores around the house or get a job, such as a paper route or babysitting.
Include your adolescents in the family monthly budget process. Make a list of all your income and ask them to develop a list of expenses, including food, rent, mortgage, car payments, car maintenance, insurance, clothing, etc.
You can use past credit cards or bank statements to analyze the amount of money you spent on these items in the past. Ask your children to calculate the difference between income and expenses. Remember, this is an excellent monthly activity that can prepare your children for building their own budgets.
Giving all your family members a personal allowance is an excellent way for your children to manage their money. These allowances may or may not tie to chores. If your children want to buy a toy, food, or anything else not planned in the monthly budget, allow them to purchase it or save for it with an allowance.
Explain to your child the significance of buying an item with the saved money. It may take some time for your children to comprehend that they can’t have anything else once they spend the money. However, they will learn about it eventually if you avoid giving into cries for more money.
Many parents do not resist the urge to rescue their children. Remember, this is a mistake and may lead to complications, especially about money management. Let your children stick to what you said about wants and needs. Although it is challenging for your children, especially when other shoppers surround them, it will help them learn how to control money flow.
The purpose is to let them learn about avoiding unnecessary debt in the future. While it is wise to give your kids advice, we suggest allowing them to make their decisions, whether good or bad. Children learn from their personal experiences and making mistakes will help them learn lessons about money management.
|Teach your Child the Following Things|
|Five Years Old||Ten Years Old||Sixteen Years Old|
|· Although a dime is smaller, it is worth more than a nickel.|
· You can exchange coins for other good stuff.
· Toys you see on television won’t look flashy at home.
· It is fun to save money, especially when you use it to purchase your favorite item later.
· You won’t get everything you ask for
|· You will have to pay for your snacks, movie tickets, trading cards, etc., using your allowance.|
· You can’t ask for an advance on your allowance
· Ability to navigate a supermarket or grocery store with a cart and list
· Open a saving account in a real bank.
· You won’t get everything you ask for
|· You will have to pay for clothing and gasoline out of separate allowances for these items.|
· You should have a realistic idea of the family’s expenses and focus on college expectations.
· You should know writing a check
· You should know balancing your checking account
· You should save half of the money you make for school expenses.
Teaching your children about money management prohibits them from exceeding their income. Not only will they spend money wisely, but they will also begin saving early to take benefit from compound interest. Make sure your child does not collect credit cards or use them to borrow money. Teach your children to honor their debts and related financial obligations. The tips and tricks given above can help you teach your children about money.