7 Tips to Teach Your Children to be Financially Savvy
Have a plan from the beginning.
Financial awareness is a skill and a mindset that comes best with time. You can start your kids thinking about money even as young as three and four by teaching them about coins and playing store or restaurant and home. The Wall Street Journal compiled research from the JumpStart Coalition for Personal Financial Literacy that breaks down and gives suggestions for what topics to focus on at what age. It includes things like the importance of giving something back that you borrowed, and comparing interest rates on a small loan.
Give your children an allowance.
Giving your children the opportunity to handle money and make their own decisions helps them to gain perspective early on. It also gives them the opportunity to make mistakes with money while the stakes are low. There are many ways to organize an allowance system, but perhaps starting at age 5, give them an amount that matches their age bi-weekly or monthly. Some parents pay their children for household chores, others make the allowance conditional on behavior. Do what works for your family, and don’t be afraid to have a conversation with your child about what is and isn’t working and why. Adjust as necessary.
Involve your kids in big financial decisions.
Children will get a feel for not only the amounts being talked about, but will come to adopt your regard for money and will mirror your actions. They will also come to understand that the big trip or the new TV came as the result of hard work and a conversation weighing the feasibility and purpose of the purchase.
Take them with you to the bank.
If they associate positive memories with the bank and saving money, they will be more likely to do it. Make the bank a big deal and explain to them what you are doing each time you go. Also, make sure that they know that you are putting money in the bank as well as taking it out. They are far more likely to do what you did as opposed to what you said.
Make money an ongoing conversation.
One conversation or a single crash course in money management will not prepare your child for real-world money management. Consistent conversations about the many aspects of money and helping them to develop responsibility with the small amount of money they have will take time, but it will be very rewarding.
Consider making it a calendar item. Every third Monday after dinner, you and your child know that there is going to be a conversation about a different aspect of money management or accountability for how the or she has managed their money.
Encourage your teens to get a job.
Earning their own money will teach children that money doesn't grow on trees or out of your wallet. Make sure that they know what aspects of their life cost money and which they are responsible for paying for. Maybe you provide the car and pay the insurance, but they have to pay the gas. You are going to provide all of their food and clothes at home, but if they want to eat out they are responsible for paying. Have conversations with them about what is and isn’t working and what’s possible with their small income.
By emphasizing giving, your child will learn compassion, humility, and an added layer of financial planning. Have them choose a church, shelter, or cause to save money for and let them give that money in person to seal in the positive memory. Again, example is key here. If you don’t feel that donating money is important enough for you to participate in, your child will probably not adopt the habit.
Like every other aspect of parenting, teaching your child to be financially wise will be a learning process. Sometimes you will feel like a failure, other times you will wonder why you try at all, but it will be completely worth it. Be open with your child about your goals for them and be consistent. Good luck!
By Learn Accounting Free | 2016-08-10 21:44:36 | Uncategorized | 0 Comments
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