It’s a parent’s desire to give their children anything they ask for but it’s the parent’s responsibility to teach the child the value of money. Teaching your children about saving money and making a family budget early saves them the disappointments and heartache of learning about money by trial and error later in life. Here are several tried and true tips for effectively teaching your children about the importance of money management . . .
The concept of kids saving money is more of a reality than most people realize. Children learn more through demonstration than just telling them what to do. Help them to save up for a big item by offering to pay for half if they can save the other half. Earning money from hard work not only teaches them the value of money, but it also teaches them to appreciate what they worked for.
Forget the Joneses
By the time your child reaches elementary school, they are going to ask for everything their friend has. This is known as “keeping up with the Joneses, and it’s not just the kids who often feel the need to do so. Unfortunately, you may have the income to give them what they are asking for. Set limits and allow your child to decide on what’s more important.
For example, if your daughter wants a new shirt and to go to the movies, explain to her that you don’t have the money to do both but she can have one or the other. Then allow her to decide which she would rather have. This will teach her the importance of making wise decisions and how it affects you.
Checks and Balances
Teach your child how to balance a checkbook early by setting up a fake store around the house. As long as the child can add and subtract, they can balance a checkbook. In the store, they will be able to purchase fun items such as extra snacks, more time watching TV, or trinkets. You can use real money, but using play money is safer with school age and preteens.
Give them a set amount of money and let them know they are responsible for keeping up with adding and subtracting the right amount. Offer them rewards when they correctly balance their checkbook. This encourages them to keep up the good work. Alter the rules for each age group.
Most banks will give teenagers who are at least 14 a checking account, open up a real account in the child’s name and make sure they know they are responsible for keeping up with the balance. Don’t bail them out every time they overspend on their account. This will teach them to stay within their limits.
Children get most of their habits from their parents. A frugal family does not have to mean a family that goes without. Take your children with you when you go shopping and give them tips on how to compare products in order to get the most for their money. Open up a savings account in their name. Using the money they saved from the tactics you taught them, your child will be able to watch their money grow.
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