Raising a child is more than just feeding them and making sure that they get their homework done. You need to ensure that they grow up to be successful adults, and part of that is making sure they have a firm understanding of money and finances. Of course, as a parent, you may wonder at what age you need to start teaching your kids about money. Little children can understand the basic principles of money. Here are a few ways to teach kids the value of money and how to manage finances.
Lead the Way
One way to teach kids the value of money is to set a good example. Children learn a lot by watching how the adults in their lives behave. When you write a check or use your debit card, explain to your kid that this a form of payment. Tell them the bank uses your money to cover the use of a check or debit card.
Another way to guide your child is to make good decisions. You can do this by resisting impulse buys at the check out counter. Point out how stores place small, commonly used items close to payment locations to encourage customers to impulsively buy things that hadn't planned to purchase. When they see you resisting impulse purchases, a child learns to avoid these items too.
Establish an Allowance
Your young children can have a small allowance that helps them learn about budgeting. You can help your child decide how much of their allowance they want to save each week and how much they want to spend. Talk to your child and decide on a large item, such as a bicycle, LEGO set, American doll, etc., to set aside money to purchase at a later date.
Help Your Child Open a Savings Account
Once your child starts receiving a weekly allowance, it's time to help them open a savings account. You can take them each week or every other week to deposit some of their money to save up for large items.
Around the holidays, you can encourage your child to deposit a portion of the money they receive from relatives. You can do the same for birthday money.
A savings account helps your child learn the importance of setting aside some of their money for future use. It also teaches them the basics of interest.
Let Your Child Fail
At some point, everyone makes a misstep when it comes to money and finances. As a parent, you may want to step in when you see your child making a mistake. Don't! You can let them fail and provide a safety net that they won't have as an adult. It's an invaluable lesson that helps them make better choices with their money moving forward.
Learn About Money Through Play
From a rousing, imaginative game of grocery store to a couple of hours playing Monopoly, you can teach your kids a lot about money without them realizing that they're learning. There are many online games for children of all ages that teach the value of money, how to make change, and the importance of saving.
Encourage Older Children to Earn Money
When you have a teenager, it's important that they find a way to earn money on their own. Your child can get a part-time job at a local business or do temporary gigs, such as babysitting neighborhood kids and mowing lawns. Earning their own money is one of the best ways to teach kids the value of money.
You can help guide and teach your children to become fiscally responsible adults and encourage them to understand the value of money. You can start their education at a young age and continue you with more detailed lessons as they grow older.