Many adults find themselves deep in financial trouble with no idea how to dig themselves out of it. Unfortunately poor money habits and financial irresponsibility is a multi-generational problem. If parents don’t know how to handle their finances properly chances are their children will grow up with bad money habits as well. Too many children are not taught how to properly manage their money, and they become financially illiterate. For these children debt can become a huge problem, they may have trouble paying bills, and as a result they could experience relationship issues due to the stress of it all. The only way to stop this cycle is to teach children to be money wise, the upside is that it is easier than most people think.
It’s Easy To Teach Children To Be Money Wise
Children are naturally curious and want to emulate you. Use this to your advantage by modeling good money habits for them. In our family I sit down with my husband at the kitchen table once a week to balance the checkbook and pay our bills. The boys are typically playing around us and while they are not looking over our shoulders they do see what we are doing and how we are communicating about our finances. When at the store we let our children pay at the cash register, giving them the chance to participate in the exchange of money for goods. The boys also hear us talk about our budget regularly, it is a familiar and friendly term for them. We explain that our budget lets us know how much money we can spend, and if an item they want isn’t in the budget that week we let them know it. What positive money habits can you model for your children?
Giving children age appropriate responsibilities will teach them early on to have a good work ethic. Using chores as a way for them to earn a “paycheck” gives them the opportunity to learn to be responsible with their own money. Their paycheck however should be earned by doing extra work around the house and not for doing jobs they are expected to already be doing as a part of the family. In our home we have things we do out of love like taking care of our toys and clearing our place at the table after supper. Then there is a list of chores the boys are paid for like helping with the laundry, and taking out the recyclables. At 3 1/2 and 5 1/2 they know and understand the difference. KC, my 5 1/2 year-old, is already showing signs of taking the initiative to do things on his own. As a mom this makes me very proud to know that my son is developing a good work ethic at an early age.
As early as preschool children can even be taught how to manage their money. A good way to introduce the concept of money is by setting them up for success with the three money rules; save some, spend some and give some.
Spend Some – As a reward for your child’s hard work a portion of their paycheck should be given to them to spend on things they want or need now. Taking a trip to the dollar store is a great way to let them choose some inexpensive items to purchase with their own money. By sticking to the small and inexpensive items they won’t be tempted to buy something out of their price range or expect you to help them out with the difference. By paying for their new treasures with their own money you children will learn to connect hard work, income, and the goods you can purchase because of it. Their self-esteem will increase and they will be more apt to take care of the things they have.
Save Some – Part of being a money wise kid is to learn to save some of the money they have worked so hard for. Open a savings account to put money away for those long-term goals like a car, college tuition, or even a first home. A piggy bank will work well for those short-term goals like a larger more expensive toy, summer camp, or a special treat. You will need to help guide and encourage them to stay on track with their goal so they are not tempted to spend the money that is easily at hand.
Give Some – This money rule helps to build character and teach our children the value of helping others. You can have your child put the give portion of their paycheck into the offering plate at church or pick a charity as a family that you would like to support. Either way they are learning to give and the recipient is being helped. That is what I call a win-win.
Helping your children manage their money and make confident money wise choices will not only build up their self-esteem but will give them a better chance at becoming a financially responsible adult one day. How can you begin to teach children to be money wise?
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