Parents often wonder if they are teaching their kids the right things in life. One important topic that many parents skip on is teaching kids about money. Start this early! If you don’t, they will learn how to manage finances from someone else who likely doesn’t have the experience that you offer. Here are a few tips to get started:
1. Use a clear jar
When children are younger, this is helpful! It’s the same concept as a piggy bank, but this gives them a visual that their money is growing.
2. Show them how to compare expenses
When they want to use their money to buy something, talk them through it. “If we buy this sweatshirt, you won’t have money to buy the video game you want.” Kids can weigh decisions and determine outcomes with money.
3. Give them opportunities to earn
Don’t just give your kids an allowance for weekly spending. Pay them for chores or tasks done around the house. Mowing the yard, washing dishes, emptying trash cans. This helps them understand that money is earned, not given. As they get older, help your teenager get a job to earn more.
4. Help them set up a budget
Your older children are likely glued to mobile devices. Take advantage of this and get them active on a simple budgeting app. This helps them manage their income, no matter how small it is. This way, they are learning the importance of making a plan for their money while you can still assist them.
5. Help them avoid impulse purchases
“Mom, I just found these awesome new purse! Can we buy it please?” Kids love last minute buys, especially when it is someone else’s money! Let your child use their own money for impulse purchases, but encourage them to think it over for a day before buying. That way, they are able to think through the decision and make sure this is something they really want. (This is a great strategy for adults too!)
6. Give them the responsibility of a bank account
While they are still at home and you can oversee their finances, set them up with a simple bank account. This helps them manage money and prepare them for bigger financial responsibilities as they age.
7. Teach them about contentment
All of us our guilty of the comparison trap. We see something on social media or on tv, and we start to think “If I had that, I could be smarter, funnier, more popular, etc.” This happens to our kids, too. “Mom, Jason got a brand new car when he turned 16! Why am i driving one that is 10 years old?”
Contentment starts in the heart. Let your kids know that although they don’t have a brand new car, their car does what the family needs and it was within budget.
8. Introduce them to the magic of compound interest
The earlier your child starts investing, the better. Compound interest is a magical thing! Introduce your children at an early age, and they will have a leg up on preparing for their financial future. .
With these few tips, your kids will be ahead of the game when they do move out on their own and start managing their own money.