Kids and Money: Teaching Kids about Money
Just like you teach your child how to read and do arithmetic, you need to teach your child about money. Even young children can learn how to manage money, which will hopefully lead to a lifetime of smart financial decisions. This guide to kids and money will help you teach your children where money comes from and where it goes.
Talk about Money Often
Talk to your children about money often, before they are old enough to get a job. When shopping, teach your children to compare prices and the value of different items. At the bank or ATM, teach them where the money comes from and that you are withdrawing your own money. Although your children are decades away from retirement, it is never too early to teach them the importance of saving for their future and making investments.
Give your children a chance to earn their own money by doing chores or getting a job. Younger children can earn an allowance by working around the house, which teaches them the relationship between working and getting paid. Help your child create a budget for their money, which includes saving, giving to charity, and allotting enough for fun. They can then make the choice to save up for nicer items or buy smaller items more often.
Open a Bank Account
Take your child to the bank to open a savings account. Talk about account fees and interest rates with your child so they understand how a bank account works. Some banks will talk to you about kids and money, so ask your banker if they have special savings accounts or programs for children. You may consider matching their savings to encourage saving money. Some parents add 25 cents for every dollar their child saves to help boost their savings account.
Let Them Make Mistakes
Your children will make financial mistakes. Maybe they will bounce a check and have to pay a high overdraft fee, or maybe they will spend their savings and not have money for an emergency. Resist the urge to fix the problem if it is minor because this does not teach them the value of saving money or keeping track of their money.
Teach your children how to shop smarter by comparing prices and using coupons. Show them just how much you can save at the register by comparing the total before and after coupons. Let them help you compare prices of products using the Internet or by comparison shopping at several stores.
So your children understand the importance of earning and saving money for the future, teach your children about money when they are young. Help them learn how to shop smart and make good investments so they will be more likely to make good financial decision as an adult.