Many adults today don’t really understand budgeting they money today, much less children. They simply weren’t taught by their parents and it shows. Concepts about debt, interest, and others have contributed to insane amounts of problems. It even contributes to the massive student loan debt crisis going on right now.
If you have children, then you probably already know they don’t grasp the value of a dollar. They don’t understand how hard you work for your money. They go about life with no worries or fears that food will make it to the table and toys will be supplied. Yet, it’s at a young age when parents should start introducing the concept of money.
Here are a few steps for teaching your child(ren) about money.
Step One: Give an Allowance
Giving your child an allowance is the first step in teaching them about money. Many parents don’t take this approach. They wonder why they should pay their kids anything to help out around the house. Well, if that’s the route you’re taking, then you’re passing up a great opportunity. You can use an allowance not just to entice them to help, but to teach them the basics.
Certain tasks they do can be worth a certain amount. Instead of outright buying them the toy they want, show them how to save up their allowance to buy it themselves. You can even introduce them to the concept of budgeting. What you pay them, of course, is up to you, but create a system that helps them learn.
Also, don’t be afraid to give more if they excel at helping out. Maybe they keep good grades, work hard, and their room is always clean. Reward good behavior with raises and bonuses. The goal is to show them how real life operates. If they want something as an adult, they have to work for it. Nothing is ever just handed to them.
Step Two: Open a Bank Account to Teach About Saving Money
One great way to teach your kids about saving money is to take them to the bank. They can budget their allowance appropriately. For example, a certain percentage goes towards what they want. The rest goes into a savings account. Maybe your teenager wants a car in a few years. Offer to match them dollar-for-dollar.
When they’re ready to pick up a part-time job, they will have a bank account already and have down proper saving techniques. These are life skills that will vastly improve the quality of their adult life. They may even enjoy the concept of a savings account if it gains interest over several years. It’s called free money!
Step Three: Becoming a Smart Consumer
Teaching kids about money don’t end with saving money. It also involves teaching them how to shop smarter. Show them how to clip coupons, chase sales, and make good buying decisions. Otherwise, they will not know how to spend what they earn wisely. It takes impulse buying out of the equation for them.
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Once a month, even if it’s a hassle, take your kids with you to the store. Show them that you don’t just buy whatever you want when you want it. You make decisions and sacrifices that work within your budget. You can even teach them the intersection between quality and price. These are essential adult skills they will need to know.
