It is never too early to build the foundation of a richer life for your kids, which is why teaching them money management starting at a young age is important. It is truly up to the parents to teach their kids where money comes from. Teaching your kids that money doesn’t grow on trees will surely make your children more disciplined and your parenting job much easier in the long run. Read on for the most important tips to teach your kids how to manage money.
Teach Them Where Money Comes From
It seems very basic, but it is important that you constantly explain the concept of money to your kids. Your kid’s perspective from a young age is seeing you press a couple buttons and money magically appears from the ATM. Explain to them that it is not that simple. Explain to them that the bank does not just hold an infinite amount of money for you and that a credit card is not just a piece of plastic that will get them anything. Most importantly, thoroughly explain that you work for your money.
Give Them an Allowance
Allowances are great so that your kids can manage their own money and realize that their money is not endless. Allowances will vary depending on their age and what you consider as appropriate. It is also important that you go over any rules that you want to enforce upon them, such as the percentage of savings that they should have or if they should have your approval before purchasing anything. You must also figure out if the allowance will be given weekly, bi-weekly, monthly, etc., or if the allowance will depend on chores around the house.
Instill in Them the Value of Giving
Giving back and having generosity are important values that we want our kids to have. It will teach them that money is not everything and to be grateful for what they have. They should practice these values through both time and money. Some ideas are to donate some of their allowance, donating items they no longer need or use, or participate in local charity events.
Allow Them to Make Mistakes
Although many parents will want to control how their kids spend their allowances, it could also be fruitful to let your children decide on what they want to do with their money. For example, if they decide to spend their entire weekly allowance right away on a new toy, they will regret their decision when they don’t have money to buy ice cream on Saturday night. Giving them the freedom to make mistakes and learn from experience will greatly impact their maturity and growth.
Show Them How to Be a Smart Spender
The best way for your kids to learn is by being a good example for them. When your kids grow up in a household that values shopping on the sale rack and cutting coupons, they will be a smart spender for the rest of their lives. They will realize that it is not called being cheap, it is called being smart.
If you want your kid to be money-savvy before they even graduate the 5th grade, practice these important money management tips in your household! When your kids understand the value of money and know how to handle it themselves, they will learn not to take it for granted no matter what stage they are at in life. After all, who doesn’t want to raise future Wall Street workers?!