Money Mastery: Top 5 Ways to Teach Kids about Finances

Money Mastery: Top 5 Ways to Teach Kids about Finances
  • Opening Intro -

    Financial struggles are a way of life for a growing number of households.

    For many people, wages can barely keep up with the cost of living.

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With economic uncertainty as a probability in the future, it’s crucial to help your children learn to get off on the right foot for a solid financial future. That way they’ll be prepared no matter what ups and downs the economy may take. Here are five ways to effectively teach your kids about how to be wise with money.

Teach Your Kids to Earn Money with an Allowance

Since a huge part of financial success as an adult depends upon one’s ability to earn money through faithful work, teaching children the value of hard work is essential to their financial literacy. This can be done by using the time-honored method of having your child earn a weekly or monthly allowance. You can make chore charts, or print them out from your computer. List the chores your child will need to complete to earn their allowance. They can put stickers on the chart for each time they complete a chore. Make sure to check and see if they’re doing their work adequately. If it’s not satisfactory, have them re-do the task until it’s done right. This will teach them that diligence pays off.

Teach Your Kids to Save

You can use a savings account at the bank or even an old-fashioned piggy bank to teach your kids how to save money. When your child starts to earn an allowance, have them deposit a set amount in the piggy bank or bank account. This will teach them the importance of setting aside money for an emergency or for future expenses. Talk to them about what they will use their savings money to buy. Though it’s fine for them to save up money for a special toy or other item they’d like to have from time to time, stress to them the wisdom of keeping some money in savings to use on major future purchases, such as education or a vehicle.

Teach Your Kids to Avoid Debt

Though some debt is hard to avoid, such as a mortgage for a house, other debt can be avoided through responsible living. When your child is an older teen, it can be wise to help them learn how to pay off their first credit card every month. You can model this behavior by avoiding credit card debt yourself. Remind them that it’s not worth it to purchase fancy clothes, cars, or furniture with a credit card if it will put them under long-term financial stress.

Teach Your Kids to Avoid Impulse Buying

Next time you and your child are approached by an attractive person at a mall kiosk who has your child instantly convinced that they really need the latest overpriced hair gadget, look at it as a teachable moment. Tell the pushy sales person that you’ll think about it, and if you decide to make the purchase, you’ll come back. Then walk around the mall with your child. Ask them questions like the following:

  • "Did you feel like you needed that hair gadget before the charming sales person told you how wonderful it was?"
  • "Are you really going to use that hair gadget enough to make it worth the money they’re asking you to spend?"
  • "Could you look online or in other locations to price check the gadget and see if it’s really as great as the salesperson claims?"
  • "What would be more important to do with the money it would cost to buy the hair gadget?"

Show them the joy and satisfaction that comes with being able to leave the mall without wasting all your money on high-dollar items that will probably end up gathering dust in the back of a drawer in a few months’ time. Let them see how empowered they can be when they learn to say "no" to the emotional enticement of materialism. Lead by example in refusing to make hasty purchases of items that are not a necessity.

Teach Your Kids to Develop a Budget

Print out a budget plan for your children to use and show them how to budget. This is especially helpful for older children and teens, but it can even be effective with young children. Help them to see where their money is going, and to set a limit on spending at a set amount in each category each month. This is another area that you can model by setting and sticking to your own monthly budget. It may mean cutting out a few trips to restaurants and movies during the month, which may be disappointing for the kids.

However, you can simply explain to them that the money budgeted for these activities for the month has run out. If and when that happens, teach the kids that they can still have fun without spending money. Take an extra walk to the park, go on a bike ride, or play games together at home. Bake their favorite homemade meal instead of going out. It’s possible that they’ll have so much fun with these free activities that they’ll learn not to mind when your entertainment budget for the month has reached its limit!

Teaching kids the importance of managing their money can provide them with a distinct advantage when it comes to leading successful lives. From relieving stress in their relationships to furthering their educational goals, wise money management can make a significant positive impact on their entire futures. Take time to give your kids the financial strategy tools they need to succeed by following these important steps. When they grow up to be responsible adults they can look back and thank you for your sage advice and responsible example.

Financing reference:

financing guides

 
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Last update on 2017-07-24 / Affiliate links / Images from Amazon Product Advertising API

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