With an ever growing problem of debt in this country, it is vital for us as parents to break this vicious cycle. We need to take the time to teach our children just how important money is and how they need to use it.
If you want your children to be financially independent as adults, then there are vital lessons they should learn growing up. Here are some tips in how to teach kids the importance of money.
Introduce money at a young age- As soon as a child can count, then they should be introduced to money. It may be as easy as just telling them what money is and what we do with it. Answer any questions they may have about money. Children definitely learn by observation and repetition. These are great ways for your children to grasp anything you are teaching them.
Talk about money- Every time money is involved, you have a great opportunity to teach your children the values of money and how to use it. Don't overwhelm them by always talking about money, but make sure that you portray the importance of it and teach them the wisdom that you have learned throughout the years so they will less likely make your mistakes. Every time you purchase something at the store, invest, or donate, this can be an opportune time to teach your children something about your values.
Communicate-Communicate with children about your values concerning money. Help them learn the differences between needs, wants, and wishes. If you can teach these crucial lessons, then this will prepare them for making good spending decisions in the future.
Set goals-Setting goals is essential to learning the value of money and saving. Most people rarely reach goals they haven't set. For every toy or other item that your child may ask for can become a perfect time for a goal-setting session. Goal-setting helps children learn to become responsible for themselves.
Open a bank account-Around ten years old or sooner, you should teach your kids the importance of a bank account. At this age, kids are old enough to have a real bank account. Make sure to explain how banks work so your child doesn't get worried that his money is disappearing and they will never see it again. Taking your child to the bank to open an account is a simple way to introduce them to saving money. Your child will learn how savings accounts work, and they will enjoy taking their money to the bank to make deposits. You can even open an online account with them.
Teach investing- Teach your child how saving and investing works. Have your child save at home and calculate the interest and see how fast money accumulates through the power of compound interest. Later, they will realize that the quickest way to a good credit rating is a history of regular, successful savings. Some parents even offer to match what children save on their own.
Pay for optional chores- Everyone in the family should have chores to do to help complete the work that needs to be done around the house. It is good to pay your children so they can have money to work with to learn these valuable lessons. If you want to pay your children, only pay them for optional work that you assign them if they want.
Keeping good records-Show your children how to keep good records of money saved, invested, or spent. This is another important skill that young people must learn. If they don't ever keep track of the money they are spending then they will eventually get into major financial trouble. Show your children how to keep receipts from all purchases in a safe place and keep notes on what they do with their money.