Helping your children brush their teeth in the morning and helping them with their homework is the easy part. Teaching them how to manage money is a little more difficult. These days most schools don’t offer much in terms of teaching basic money management skills, so by giving your children a few simple skills on how to save and handle money, they are likely to be more confident and better equipped to handle the temptations of a growing consumer society.
Here are a few financial tips and ideas:
- Teach them from a young age. These days children are constantly being bombarded with advertising for new toys and junk food, so it’s never too early to start.
- Give them an allowance. In order to learn about money, it’s important they have the opportunities to practice with real money. Even a small allowance of $1 per week teaches the value of saving.
- Make them earn it. Instead of just handing your child an allowance, teach them that their money must be earned by giving them responsibilities, such as washing dishes or tidying the backyard. You could also encourage your children to earn above their allowance by babysitting for friends, walking the neighbour’s dog or even getting a job at the local supermarket.
- Open a savings account in your child’s name where they can deposit the money they earn. This will teach them about interest and the value of putting money aside each month. You could even give them an incentive by matching their savings.
- Help them make a budget. When they grow up and leave home they’ll need to be able to stick to a budget, so teaching them the importance of budgeting early will help them in the long run.
- Help your children establish goals. Many bad spenders suffer from an “I need it now” attitude, which can be avoided by creating goals. If there is a new toy they want, help them set up a savings plan so they know exactly how much they’ll need, and how long it’ll be before they’ve saved enough.
- Allow your children to make mistakes. If they spend all their allowance on a frivolous purchase and then come to you looking for money (and they will), don’t just hand it over. Instead, use it as an opportunity to teach them that there are financial consequences that come along with spending decisions.
By consistently reinforcing these financial tips with your children, they will develop a healthy understanding of money management – a great asset for when they grow up.