One of the best ways you can teach your kids about money is by modeling good money management skills yourself. Let your kids see your budget, pay bills, and comparison shop Teaching your kids to handle money is really about setting a great example for your kids. Share with them how things work, and when they don’t.
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Teaching Your Kids to Handle Money
When it comes to money, it’s never too early to begin learning smart saving and spending habits. Teaching kids about money, while they’re young can help them prevent money problems and poor spending habits in the future.
Kids of all ages need to know the importance and value of saving money. Whether it’s saving money for an unforeseen emergency or for something they want, savings should be taught early on. One thing you will want to teach your children to save for is college.
Even if, as they get older, they decide to go with a career that doesn’t have college, it still teaches the importance of saving while at the same time putting a little money away.
Kids can learn the concept of saving beginning in preschool. You can help them learn the value and purpose of saving by establishing a family piggy bank or family penny jar. When the jar reaches a certain amount, reward kids for saving by using the money for a treat or trip somewhere fun.
Young kids will not understand amounts, but they will still enjoy reaping the rewards of saving.
As kids get older, they may start earning money through odd jobs such as mowing lawns or babysitting or by an allowance. Encourage them to save at least 10% of what they earn for a “rainy day,” or for college, and so on.
Older children and teenagers should be encouraged to plan by saving for their first car or for their schooling. Open a savings account for their kids while they’re young, and each month when their statement comes, let them see how the interest grows.
A great way to teach kids to handle money is through an allowance. This doesn’t need to be a lot of money, but if a child learns about money, he should have access to it.
Before you start handing out an allowance, it might be a good idea to let your child know what he is expected to do with his allowance. For example, you could require that he put aside 10% or more for savings, then the rest for his spending purposes. This is a good way to teach about savings and budgeting as well.
If you are uncomfortable with the idea of an allowance, consider tying the allowance to chores or other things, such as good grades. This way, the child will also learn the importance and concept of working for their money.
Encourage your high school kids to get a part-time job. It will provide them with spending and saving money, but it will help build other valuable skills.
Lead by Example
If they ask questions about what you’re doing or what you’re spending money on, answer honestly. You don’t need to burden children with the details of the family’s financial state, but they should know that money does not just appear; it must be worked for, and there is a limit to it.
Good spending and saving habits should be taught and nurtured early in life.