Starting early can help kids learn how to responsibly handle money. This can brighten their futures and help them learn the value of what they someday will earn. It can be difficult to help children understand certain aspects of finance, but there are 5 ways to teach your children about money to help them develop a firm grasp on why responsible personal finance is important.
Give an allowance. An allowance is a great way to give kids control over a certain amount of money. They get to choose how to spend or save it. This helps them work through the math and decisions necessary when spending.
Let them help buy dinner. A fun way to help kids learn how to spend money carefully is to let them use a certain amount of money to help buy dinner. Walk him around the store and collect the items needed for dinner. Explain why it’s important to get the needed items before the fun extras. Then go home and cook dinner together. This can be a delicious lesson in money management and will allow him to feel like they’ve contributed to the family.
Save for a big item. Learning how to save money is a very important lesson that can be taught early. Let your child pick out an item that costs more than a single installment of her allowance. Help her set up a savings plan. Once she’s saved enough money, you can go together to get the item.
Let them earn extra money. While an allowance is great, it’s usually a set amount of money earned through regular chores. A good way to learn about money and the value of going the extra mile is to have a list of additional, occasional chores along with what they pay. This gives children the opportunity to choose to do more work for extra money.
Consider teaching them about debt. Debt can be crippling in adulthood. It’s a hard lesson to learn and very hard to teach. If your child wants to borrow money, it’s up to you to choose how to handle the situation. Letting your child have some money isn’t a big deal, but at least once you should consider using it as a lesson in debt. Let him repay the money with interest to help him learn to carefully consider borrowing in the future.