How to Teach Your Kids About Money Management
Interested in learning a few ways parents can help children learn about money management? You can set your children up for financial success through these three steps.
1. Encourage Allowances or Jobs
Some parents give their children a small allowance for completing chores. Others prefer for their children to find odd jobs, like babysitting or shoveling driveways. Children who handle even small streams of income may be better equipped to manage cash as they grow older. Children with this practice will know the pace at which they should spend and save for financial stability.
Allowances and jobs also teach children the value of money. If your child receives an allowance of $2 every week, you could advise them, “This toy is $10. If you spend that now, it costs more than one month of allowance. Is that worth it to you?” This helps children understand the sacrifice behind purchases.
2. Set up Their Bank Account
Children with a bank account learn to prioritize saving over spending. Make trips to deposit cash an exciting and anticipated event. As your children develop a habit of saving funds, they will learn to save larger quantities of wealth when they grow older.
Saving in a bank account also helps children reach their goals, like saving enough to buy a toy or gadget. One day, this goal-oriented saving could help your children save for college. Children with a bank account, even if it has as little as $1 in it, are seven times more likely to attend college.
Banking will enable children to learn how money works and is stored, which will give them a larger sense of the world around them.
3. Set an Example
Most of all, our children notice and emulate our behaviors. Our attitudes about money teach our children how to feel about money. For example, try replacing “We can’t afford it,” with “We have to save up if we decide to buy something like that.” This shows children personal control over financial decisions.
Another way you can set a responsible financial tone is by talking to your children about your financial decisions. For example, explain, “Oh, look! This type of snack is cheaper, and it tastes the same,” or “I’m not going to get coffee today because I’m excited to spend that money on ice cream with Daddy later!” Your financial attitude of responsibility, planning, and stability can set up your children for a lifetime of financial security.