Tips for Teaching Your Kids about Money
Teaching your kids about money is a very important thing to do. Many experts say once the child is able to count the financial education should begin. For some parents this is more difficult than it is for others. Here are some tips to help you teach your child how to be financially educated.
Giving your child an allowance helps them learn to work for money and appreciate what they earn. Many experts agree that children as young as five years old can earn an allowance. The chore must be age appropriate though. Once your child gets a little older instead of giving them money to go out raise their allowance and make them responsible to paying their own way. Then make them wait two weeks in between getting their allowances. This is a good way for them to learn about making their money last. Finally by the time your child turns seventeen you should try paying them only once a month and make them responsible for creating a budget to make it last.
Saving money is another must know for your children. Kids should have savings accounts in their name so they can begin saving money. For your children who are under the age of twelve, you should set a specific amount of the money they get as gifts throughout the year to go to savings. One recommended amount is fifty percent of all the money given to them throughout the year. Once the child is thirteen, offer to match some of what they put into savings. For every dollar they put into savings you can put fifty cents or whatever amount you agree on. This will help motivate them to save money, which will help them get into good savings habits.
Having knowledge in credit and budgeting is another skill you should make sure that your child has. Once your child starts reaching their teen years, get them a debit card. Put half of the money you would give them for their allowance on this card and let them have the other half in cash. This will help them to learn to budget their money and not over spend with a card. They do not have to have a checking account for this if you do not want them to. A prepaid debit card would work just as well.
As your child moves through their teen years make sure that you are teaching them about budgeting, saving, and credit. Teach them about credit cards and make sure they understand that credit cards are not free money and it can be easy to get buried under a mountain of debt. Make sure that they understand how to create, review, and revise their budgets so that when they start earning more they already have a grasp on how to do this. It is also important to make sure that they understand the importance of saving money. If you teach your children these basic skills of finance they will have a better start in life when they get out on their own.