Teaching Kids About Money
Teaching children about money is just as important as teaching
them to read. Giving kids the basic knowledge of finances will
help them become fiscally responsible adults.
It is almost never too early to begin teaching your kids about
money. It is a lesson that will affect their financial future and
how they live. The best way to teach children about money is to
set a good example by managing your money well.
Here are some tips to help teach your children about
money management:
- Identify needs versus wants. Ask your
children to write down everything they buy for an entire month.
Then discuss whether spending levels were appropriate and how
they could make better use of their money.
- Create a budget. Create a sample budget
together for the month. Write down how much money should be spent
on entertainment, savings, charity, etc.
- Set goals. Set an age-appropriate savings
goal, such as a toy or clothing.
- Set responsibilities. Explain what you
will be financially responsible for (food, clothing, shelter,
utilities, etc.), and what they are responsible for (movie tickets,
music, etc.). Write it down so there is no confusion in the future.
- Set consequences. Explain what will happen
if your child does not stick to the budget; write it down and
follow it! It may be tempting to bail your children out, but
doing so will not help them learn.
- Open a bank account. Explain what happens
to the money in the bank. Emphasize that by saving money, they
will be able to afford to purchase something they really want
in the future.
- Assist with shopping. By comparison shopping
with your children, you can help them make good spending decisions.
Ask them if they will still value what they are buying in a few
months, years, etc. You may also help them find a better price
for the item they want and teach them to save the extra money
for a later use.
There is no set method for teaching children to become responsible
money managers. But by teaching through examples, children can
develop healthy attitudes about money, its purpose and limits,
and its practices.
The above information should be understood to be a general
discussion of the subject matter and DOES NOT constitute
a legal opinion about the situation. For further information
please consult a qualified attorney.
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