Tips for Helping Your Kids Learn About Money
Managing money is a skill that everyone will need to learn. Whether you learned about money management from your parents or on your own, you’ll want your kids to inherit your knowledge about responsibly saving and spending cash. Learn how to teach your children about money management with these tips.
Teaching Toddlers About Money
Even as toddlers, your kids can start to learn about saving and spending money. Instead of a piggy bank, use a clear jar for them to start saving coins. This way, your child can visually see it grow as they add to it. If your toddler wishes to buy something, like a toy, help them count the correct amount out of their jar and hand the cash to the cashier. Doing this will help your child understand that items cost money.
Additionally, young children will pick up on their parents’ habits quickly, such as using a credit card for expenses. Set an example for your kids by trying to spend with physical cash. Also, avoid arguments about money if your kids are around.
Teaching Pre-Teens About Money
For kids entering their teen years, you will want to enforce just how important it will be for them to prioritize purchases. For example, show opportunity cost by explaining that while they may be able to afford the latest video game, they wouldn’t be able to afford that nice outfit that they wanted if they bought the game.
Along with weighing decisions on which items to buy, your pre-teens need to know that money is earned. While it’s nice to treat them once in a while, avoid impulse purchases and encourage your child to wait a day to see if they still want it. Also, consider giving them commissions for chores done well instead of an allowance.
Teaching Teenagers About Money
As your kids grow up into their teenage years, they will receive more freedom with their money as responsibility shifts to them. With the money they’ve saved, help them set up a savings account if they don’t already have one and start teaching them how to set up a simple budget. If and when they apply for a credit card to start building credit, make sure they fully understand the dangers of building debt.
Now is also the time to have a serious conversation about their future. Do they wish to go to college or enter the workforce? If they plan on completing more school, encourage them getting a part-time job near campus to help pay for tuition. If not, help steer them towards finding a full-time job to get the money flowing.
Last but not least, help your teen understand contentment. For instance, if your teen drives an older car, help them understand that it’s okay to not have the newest car on the block as their current ride is reliable and is helping them save money for other things.