Helping Your Kids Learn Good Money Management
Sound financial skills are crucial for a successful life, and those skills can be fostered from an early age. If you have children, it’s your responsibility to begin teaching them about money management and to help them to develop confidence in their financial abilities. Even small lessons will create a positive foundation that can be built on for years to come. Use these steps and your children will be fully prepared for all of the money-related challenges that may come their way in the future.
- Set a strong example. The best way to teach your children how to manage money well is to demonstrate the practice yourself. This can certainly be a challenge, but it doesn’t have to be impossible. If you’re struggling with your own debts or finances, ask for help from experts. Think Money reviews your finances, helps you come up with a strategy-driven debt repayment plan, and gives you tips on how to invest your money well. Building your own wealth will give your kids an opportunity to witness how it’s done first-hand.
- Explain transactions as they happen. If your children think that money is an invisible entity with no real meaning, they won’t ever discover the true value of a dollar. When you’re making purchases in a store or drawing cash from the ATM, talk your kids through the process and explain that this is the money you earned through your work. This will help them understand the mechanisms involved, instead of simply seeing the results of the purchase.
- Let them help out in the supermarket. Choosing items to buy in the supermarket is a great opportunity to teach your kids about budgeting and making good financial choices. Have them find the lowest cost option out of a range of similar items, and explain how particular specials or deals work while you shop. They’ll learn all about budget buying while being kept entertained during a potentially boring trip out.
- Have them sit in on bill paying day.Paying bills is rarely the most fun activity of any given day, but it’s certainly an important one. Once your children are old enough to understand, have them sit down with you while you sort through your bills for the month and make payments. Explain what each bill is for and how you’ve budgeted for the expense, and talk them through how the payment fits in with the overall budget of your household. They can even fill in their own (imaginary) bills to practice for the future.
- Set up a pocket money plan. Pocket money is a tried and tested tradition for good reason. It teaches children about earning money through hard work, and gives them a valuable lesson in saving and managing their spending. Make sure you only give pocket money when it’s well deserved, and hold back on payments if chores are not done or obligations are not fulfilled. Set the pocket money amount based on the child’s age and your own personal budget, and don’t feel pressured to give larger amounts based on the sums they claim their friends are getting. Teach them that through saving, they can buy anything they like (within reason), and allow them to learn that instant gratification isn’t always the best solution.
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