It’s not a shock that every parent wants their children to grow up with a balanced attitude towards spending and saving. But the reality is many people don’t know when or how to go about passing the proper financial values to their kids.
It’s never too early to begin teaching kids about the value of money and financial responsibility. By starting at a young age, early financial education will help your kids develop lifelong and positive spending and saving attitudes. The following simple steps will help shape your children into financially responsible adults and start them off on the right foot as they grow.
A Savings Jar and Setting the Right Example
The best way to begin teaching small children about the importance of money is by using a clear and defined savings jar. Deposit spare change regularly and show your child that you are excited about putting some money away. The reason you should use a clear jar as opposed to an opaque piggy bank is so your children can actually see the savings grow.
Getting your child involved and excited is crucial so be sure to count the savings out loud with him or her. Set a day each week to count out your savings so your child can physically see the monetary growth.
Don’t argue with your spouse about money while your children are around, this can leave a bad impression on them and add to the possibility of picking up bad financial habits. Also, spend wisely when your children are shopping with you. You could be imparting bad financial habits on your kids if they constantly see you overspend when at the mall or grocery store.
Opening Their First Account
Many banking institutions offer first-time accounts for young children which are perfect ways to begin teaching kids about the benefits of a bank. Bank accounts of this type often have added bonuses like piggy banks or children’s bank books that can help them keep track of their savings.
It’s normal for children to have misrepresented ideas about how a bank functions as they grow up. By taking them to open their own account, you can help them gain a better understanding of the banking system. Reserve this occasion for when your son or daughter is in their early elementary school years to ensure they understand the basics of the bank.
The Value of Earning Money
As you child grows into their tween years, it’s a good idea to start paying them for the chores they do around the house. This is a good way to teach kids the value that money has to be earned. Simply giving your son or daughter an allowance for no reason won’t help them grow to be independent adults. Instead, show them that money needs to be earned through hard work and by taking initiative.
Encourage your child to find other ways to obtain some money as well. For example, help them set up a bake sale and let them know that you expect to be paid from their earnings for the supplies and time you offer. This will teach them the value of hard work while also showing them that agreements should be honored.
Opportunities, Mistakes, and Giving Back
You may think micromanaging your child’s spending is helpful, but in reality, you should be letting them make some mistakes. Each error they make is a lesson that will help them get better at weighing and making financial decisions as they grow.
After your child as learned about proper spending and saving, teach them about giving back. Ask your son or daughter to pick a church or charity they like and show them that they can make a donation to help. This will teach your child that giving back to those in need is important and that money shouldn’t only be spent on oneself.
It’s best to teach your children about the possible dangers of credit cards when they are older teenagers and have jobs of their own. By this point, they should have a grasp on proper saving and spending but may haven’t had to deal with credit cards first hand. Show them that a credit card can be helpful at times, but they need to be managed properly.
Young adults in college and university typically use credit cards to cover the cost of supplies and textbooks. It’s ok for your child to do this as well if they need to, but you need to make sure they are handling the debt responsibly.
Teach your kids to keep a reserve fund account that can be used to cover any acquired debt so it doesn’t linger for too long. A separate, dedicated account is a great strategy for kids that tend to have issues covering financial debt.