With a changing economy, now more than ever it is important to teach your children about financial responsibility, even at an early age. There are many different methods for teaching little ones about money.
As part of training the next generation, it is vital to be involved in the money education of your children. In a lot of ways, teaching your kids how to handle money correctly is also teaching them your values, ethics and morals. If you are ready to start integrating financial planning into your child’s every day learning, look to this list for a few effective ideas.
Teach them where money comes from
While it might be interesting to talk about the national mint and bank circulation, it is more practical to show your children how you as parents provide family funds. It is important that they understand the process of earning money and why it is necessary to live within your means.
One of the most common ways to teach your children this lesson is by giving them an allowance for doing chores around the house. Give each chore a dollar amount and connect the fact that parents go to work to do the same thing. The next step is teaching them how to manage their newly earned cash.
Create a budget with your kids
The number of teens and college students who not only have never budgeted before, but also do not know how to budget is astounding. Make sure that your kids are not part of that group by helping them create a budget for the money they are earning.
There are budgeting worksheets and other resources online to help you and your kids set up a budget. Make them plan out where they will spend their money each week. If they want an extra activity, make them do extra chores to earn it, teaching them the value of money and a savings account.
You can also let them be a part of the family budget. When you sit down to plan out the family finances, have your kids sit with you. Explain each item as you go along so they understand the expenses that the household is obligated to purchase.
Help them understand loans and credit
Credit card debt is a very prominent issue in American society. Help you kids understand how to avoid credit card debt and what loans, like TitleMax, are and why they are used. If they understand how credit works and how to use it correctly, they are less likely to get into financial trouble in the future
Set up a loan system with them if they want to buy something outside of their budget. Give them an allotted time to pay it off, and supply penalties for late payments, just as a real loan would work. This system of delayed gratification will teach them how to manage their money and realize the value a dollar has.
Jessica Socheski is a freelance writer who loves researching creative solutions for personal finance. You can find her at The Teaching Box where she is an editor or on Twitter.