You can help your kids become financially independent by teaching, talking, and showing them how to be money smart from a young age. If you communicate, educate and demonstrate good money habits, your children will learn to practice them once they graduate into adulthood.
You can start as early as a preschool by giving them three jars—one for saving, one for spending, and one for sharing.
Since children learn through observation and repetition, the more frequently you discuss money and demonstrate its importance in their lives, the better. You can play an active role in teaching your children about money by turning everyday topics or activities into money lessons. Here are a few money-wise steps to take to teach your children.
Motivate your Kids to Earn Money
When your kids ask for money for an impulse purchase, such as books, CDs, or DVDs, motivate them to earn all or part of the money. Your children will begin to learn the principles of personal choice, goal setting, and discipline by tying the learning experience to satisfy a desire.
You might want to sit down with your kids and talk about different ways to make money. What kind of work could they be able to do? Helping out around the house can earn a child an allowance. Tweens (children aged 10 to 12) can make money in various ways, including paper routes, babysitting, mowing lawns, raking leaves, shoveling pathways, and so on. They can also consider alternative opportunities, such as working as a computer tutor or a pet sitter. Many older teenagers work part-time in stores and restaurants. They can also work as lifeguards or camp counselors during the summer.
Educate your Kids to Save Money
Whenever your child receives money, as a birthday present, other gifts, or allowance, divide the money equally into the three jars. The spending jar: for candy or other small purchases. The saving jar: for costlier items requiring longer-term saving. The sharing jar: for charitable causes.
Any child can be encouraged to be a good saver. Opening savings accounts for your children is a proven strategy. After you have opened a savings account, go over the monthly statements with your child(ren) and discuss how the savings increase as a result of contributions and interest. You may encourage older teens to save even more by encouraging them to deposit money into their accounts to help pay for larger purchases and memorable excursions for themselves, such as a trip to Ripley’s Aquarium in Myrtle Beach, a new bike, computer, or smartphone.
Your children will learn the value of discipline and goal setting as they become more accustomed to saving, two financial skills that will serve them well throughout their lives.
Teach your Kids about Bank Cards and Money Management
Teenagers should learn about bank cards and budgeting before heading off to college to avoid credit card debt problems later in life. Preapproved credit card applications are frequently sent to college students via email and mail. Before that happens, teach your children how to use these cards. How do you pay your bill? What happens if you don’t pay? Credit scores and what to do if you lose your credit card are all vital topics to discuss. Consider sending your children to college with debit cards rather than credit cards so that they can begin budgeting and not spend more than their accounts allow.
Take a look at various debit cards available online to learn more about the different packages and pricing. Greenlight and goHenry are good examples of debit cards, but how goHenry compare to Greenlight is the next question. Greenlight might be the best option for families with more than one child. If you only have one child, though, goHenry can be a cheaper option.
Make it clear to your children that it is better to give than to receive. Whether you teach your children to help friends in need or to donate to a charity, this is an important lesson that will shape their future outlook.
Assist your Kids in Making Financial Decisions
Cautious spending is a skill that can be taught to children of all ages. Depending on their maturity level, you can allow them to choose how they spend all or part of their budget. For instance, kids that enjoy hanging out with their friends can have a meal at one of the restaurants in Myrtle Beach but should realize that paying for their friends too, would not be a wise choice. In the same vein, you will teach them valuable lessons about personal choice and money management if you assist them in becoming smart spenders.
Naturally, you will want to keep an eye on how your children spend their money and advise them on the consequences. However, prevent the urge to veto their spending decisions unless they are making irresponsible purchases.
Instill the Value of Investing in your Kids
If you provide your kids with their stock, they will develop an interest in investing and better understand how it works. First, go over the fundamentals, such as how to read stock market reports in the newspaper.
Assist them in selecting a company they are interested in and purchasing a few shares to follow. Explain the various factors that can affect a stock’s success along the way, such as product competitiveness, changing public tastes, the quality of a company’s management, and so on.
Teach your Kids to be Generous
We all want our children to become responsible members of society when they grow up. You can help them get started by requiring them to set aside a portion of their earnings for a worthy cause, such as your religious institution or a charitable organization. For example, you can suggest that they donate to The Grand Strand Miracle Leagues, an organization that allows people with special needs, particularly children, to participate in sports and recreational activities in a community-supported, safe, adapted, and encouraging environment.
You might want to talk to your kids about different options so they can decide which organizations they would like to support.
They can then set aside a certain amount of their monthly allowance or money earned from their job to fund their charitable giving goal. It teaches the value of saving as well as the joy of giving.
Conclusion
It is essential to share these financial life lessons with your kids, and they are much more likely to be financially savvy and independent once they graduate from school. Be clear about your expectations and let them know your limits. Teach your children to be intelligent financial consumers, and they’ll reap the dividends for life.