Teaching your kids about money can help lead to a lifetime of fiscal responsibility and financial stability. It’s essential that your children learn from a young age the merits of managing money. With nearly 60% of today’s working-age Americans having very little or no retirement savings, any unexpected expense can impose a hardship for many families. There is a very real debate on the root of the problems—the export of jobs, inflation outstripping wages, and an undertrained workforce—but there is also a number of personal factors to consider. Top among these is taking responsibility to ensure the next generation is better prepared.
Teaching your kids financial responsibility at an early age can lead to a lifetime of healthy financial habits. Here are six ways you can start teaching your child about money:
Make No Mystery About Money
Many parents simply want to provide for their children without ever talking to them about how they provide for them. Yet, by not explaining that money is earned by mommy and-or daddy going to work, a type of mystique can surround the earning of money or where the money comes from. If you don’t teach your child where the money comes from they will have difficulty knowing how to earn it when they are on their own. Include your children in the conversation of the family budget, the financial decisions that affect the family, and money discussions in general. In doing so, you will be providing them with an excellent learning opportunity.
Money is Earned, Not Supplied
Parents should help their younger children understand that money is earned. It is not free or something that is available to give away. When children begin their early-elementary years, assign a system of chores for them to earn an allowance. Explain that work is the way to make money and earn an income. The better parents explain how money has to be earned, not supplied or given, the less dependent children will be on their parents for free monetary handouts.
Work is a Good Thing
As your children get older, teach them that the value that work offers is in the earning of money. That earning money is a good thing because it offers them the financial freedom to do what they want in life.
Start With a Piggy Bank, Then Open a Bank Account
Saving money is a responsibility you must teach your children. Start early. Younger children are very perceptive and very literal. That’s why a piggy bank is a good way to teach them to save money. The heavier the piggy becomes let them know the more money your child has saved. Then, move to a Mason jar. This will allow them to ‘see’ how their money grows. As they get older and begin to seek other opportunities to earn money, have them open a savings account at your local bank. Teach them how to deposit the money they earn into the account, how to monitor the account, continuing saving, and how to use a debit card.
Teach Them How to Spend
The best way to encourage sound spending habits is for you to have sound spending habits. When it comes time to grocery shop or go to a department store, involve your children. Teach them to make a list of what it is you are going shopping for and the importance of sticking to the list. This will teach them to avoid impulse buying and save their money.
Create Opportunities to Earn Money
When children reach their teens, teach them to look for and create opportunities to make money in addition to their allowance. They can earn extra income by babysitting, doing yard work for older neighbors, mowing lawns, even finding a part-time weekend job. In regard to the latter, teach them to understand the difference that receiving a paycheck for a regular part-time job is different than being paid in cash for occasional work. Paychecks signal a chance for receiving an income on a regular basis, and can even be deposited directly into the savings account.
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