How much do your children understand and know about finances? Do they know how to save? Do they know how to budget? Sooner or later all kids will grow up and live on their own. Basic financial knowledge and understanding is an important skill which is needed in order to have a successful life. This knowledge is not taught in school, so it is important for parents to teach their kids how to be reasonable with money. Below are some ideas on how to make your kids money wise.
Contrary to common belief, it’s best to start teaching the skills early. It is never too early to start and is very easy to do while using real life scenarios, which will be easy for them to relate to. When they are young give them control of the weekly fruit budget for the house, or let them help with the budgeting, cutting coupons, planning, and shopping. Older children can be taught with their own money once they get their first part-time job. Once they get old enough and have income, use this chance to teach them how to spend it. For example, say your child has earned $100 over the last month and wants to buy a new game for his PlayStation. Instead of rushing them to the store and grabbing the first one they sees and want, encourage them to save part of their money while shopping around and picking out the perfect game at the perfect price. Get online and see what deals they have. Then maybe take him shopping at a secondhand Game Store. Show him that this way it’s possible to get two instead of one, all while staying within his budget.
Another great way to teach children financial skills is to open up a bank account in their name. It doesn’t take lot of money to open an account. For most children accounts, you are able to open one up with as little as $10. Since you’re opening an account for a minor child your name will also be listed on the account. After opening the account you are then able to use your banks online tools to teach them financial responsibility. You can do this by reviewing their accounts and helping them think about the following:
Are you staying within your budget? If not, how far off are you from your spending limit?
Are you meeting your savings goal? How much interest are you earning?
What are your plans with your savings? How long will it take to reach this goal?
Let your kids ask questions back and research any answers you may not know. The Consumer Financial Protection Bureau has a great section of its page, called money as you grow. Follow the link above for more information, ideas, tips, and recourses. Teaching your kids the financial skills early on is best way to help them become moneywise and financially literate adults. Since financial education is not a mandatory subject in schools, it falls on the parent to make sure you set them up with a solid understanding of money. Take the time to show them the wise way to be adults. Your pocket book will thank you in 20 years.
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