One of the most important gifts you can give your children is an understanding of how to manage money.
We all want our kids to be financially-savvy adults one day, but it’s become increasingly difficult in today’s swag culture. Here are some things you can do to ensure your child grows up with a basic understanding of financial management:
Make it real.
Hearing about finance from others is good, but as you’ll see throughout this article, encouraging participation is crucial. A great place to start? Their own account. Your Credit Union has a variety of free, age-appropriate, savings and checking accounts. They come with special clubs (website and newsletters) to make learning about finance fun and include competitions, prizes and much more. Learn more here.
Make sure your child has money to manage.
Whether you choose to give your child an allowance or make them earn it, the key is to provide your child with the opportunity to manage their own money. Even a small amount can help provide valuable lessons.
Let them know what expenses they must pay for.
Naturally, you have the basics covered (basic food, clothing, and shelter). If children want the name brand shoes or a new video game, let them know they’ll have to save for it. Help them budget and save their money to make the purchase.
Don’t bail them out.
If your son or daughter spends all their money and can’t afford that cool new toy they wanted, too bad. Let them know it’s time to start saving up again.
Help your child shop wisely.
Show them how to search for specials online and in newspapers. Show them how the same item can vary in price depending on when and where you buy it. Introduce them to overstock sites, garage sales, and bargain outlets.
Make coupon-clipping a family activity.
By showing your children the value of saving money and by making it fun, you are potentially building a habit that will remain over the long term. Explain that using coupons for items you will buy anyway is like finding free money. Spark coupon interest by putting away the money these coupons help save, and then allow your children to pick an activity for a family night out using that money.
Teach kids how to shop (at a store).
A trip to the grocery store can provide endless lessons in bargain-hunting and comparison pricing. While this can be done in nearly any store, it’s most effective in a grocery store because of the large number of choices available. Show your child two boxes of similarly priced cereal and discuss the difference. It’s a great way to introduce the concept of getting the same value for less money.
Eat at home as often as possible.
It’s no secret that, when time is tight, eating out can provide a quick and easy solution. Unfortunately, it’s also an easy way to overspend on food. Families can benefit from healthy, well-balanced meals prepared at home. As an added bonus, you can get the entire family involved in preparing meals, which will teach kids how to cook for themselves when they’re older
Make it a game.
Allow your children to come up with their own, cost-savings strategies and then keep track of who can come up with the most savings each month. By making it fun and by offering an incentive, you can keep your children interested and engaged in the concept of saving.
Teach your kids about investing
Teaching money to your kids doesn’t just mean coins and checking accounts. In fact, one of the most important (and easiest) financial concepts for children is investing. With investing, they can watch their money grow while learning that gratification isn’t always instant. As you start the conversation about investing, focus on the big picture. When your kids buy stock, they’ll own part of the company. When the company makes money, they make money (and vice versa). Just be sure to avoid jargon. Otherwise, you’ll watch their eyes glaze over as you try to explain “diversification.”
This article was developed in partnership with Balance.