It is better late than never. As a parent, it’s important to teach your kids about money. Learning the basics of budgeting, saving, and investing can help children become financially responsible adults.
But where do you start? Here are 5 easy ways to get your kids started learning about money. From giving an allowance to opening a savings account, these tips will help teach your kids the importance of managing their finances.
5 easy ways to teach your kids about money
As we said earlier, it is better late than never, getting your kids prepared for adulthood by teaching them about the little things about money, will be one of the best things you can offer your kid as a parent.
And that’s exactly what this blog post is all about, We have successfully compiled 5 easy ways to teach your kids about money, and we kickoff with:
1) Give them an allowance
One of the best ways to teach your kids about money is to give them an allowance. An allowance can help children learn the basics of budgeting and managing money, such as saving for something they want or need and learning to wait for gratification. It also gives them a chance to practice spending within their own budget.
When deciding how much to give your child, consider factors such as the cost of living in your area, their age, and the responsibilities they have in the home. Depending on their age, you may want to consider setting specific guidelines or expectations for them to follow.
For instance, they might be required to save 10% of their allowance each month or save up for larger purchases.
When giving your child an allowance, it’s important to talk to them about making wise decisions with their money.
They should understand that money needs to be saved, not just spent on impulse. You can also use this time to discuss the difference between needs and wants, and why it’s important to save for bigger items instead of just buying everything they desire.
2) Have them save for a goal
Saving for a goal is an important lesson to teach your kids about money. Not only does it help them understand the importance of saving, but it also shows them the rewards of hard work and delayed gratification.
To start, sit down with your kids and discuss their goals. It could be something simple, like buying a new toy or game, or something bigger like saving for college. Once you’ve set the goal, create a plan to get there. Show them how to budget and save money from their allowance or other sources to reach their goal.
When they reach their goal, celebrate with them! This reinforces the idea that you can achieve anything if you put in enough effort. This will give them a positive attitude towards money and encourage them to save and plan for the future.
3) Help them make spending decisions
Teaching your kids to make smart spending decisions is an essential part of their financial education. To do this, you should explain the difference between needs and wants.
Needs are things we need to survive, like food and shelter. Wants are things we don’t necessarily need but would like to have, like candy or new clothes. Explain that it’s important to spend money on needs first before spending on wants.
Help your kids create a budget for their allowance. Decide together how much they can spend on wants each month and how much should be saved or put towards future purchases. It’s also important to talk about delaying gratification.
Sometimes it’s better to wait and save up for something rather than buy it right away. Help them think through their choices by asking them questions like “What do you want more, this item or being able to go on vacation next summer?”
Finally, encourage your kids to compare prices and shop around when making a purchase. Show them how to look for deals and coupons, or how to shop second-hand instead of buying new items.
Doing this will help them understand the value of money and make smarter spending decisions.
4) Teach them about debt
Debt is an important concept to understand, especially when it comes to teaching your kids about money. Debt can come in many forms, such as credit cards, student loans, car loans and mortgages.
Explain to your children that debt can be beneficial, such as buying a home or car, but it must also be managed responsibly. Explain that if you are unable to make the payments on your debt, it could cause serious financial strain.
Make sure your children know the dangers of taking on too much debt or not paying off debt on time.
Explain the different types of debt available, such as secured and unsecured debt, and the different interest rates associated with them.
Show your children how to read a credit card statement, so they can understand how much they owe and what fees they may have to pay.
Explain that debt is part of life and it can be managed responsibly. If they do end up having to take on debt, have them create a budget and plan out how they will pay off the debt in a timely manner.
Show them the value of delayed gratification, so they can learn to save up for something they want rather than using credit to purchase it.
5) Explain the importance of charity
Charity is one important lesson that has always being overlooked, when parents tend to bring up a child, which is a very bad practice as a parent. Make sure to teach your kids about charitable giving when choosing how to teach your children about money.
Make sure they aren’t under the impression that all of the money they receive is for their personal use, and remind them of the good they will be doing and the smiles they will be bringing to the faces of so many people who are now feeling down if they decide to choose this route.