Teaching kids about money management is a great way to prepare them for life. It is important for kids to learn good habits of money management when they are young, and these good habits will make it more likely for them to make wise financial decisions as adults. Here are some ways to teach kids about money management:
* Give them an allowance. Even a very young child can do jobs around the house to earn a small amount of money each week. You can then teach your children to allot some money for saving, some for spending, and some for giving to those in need. Consistent reinforcement of the concept of saving a part of what you earn will ingrain this principle in your child’s mind, and hopefully it will become a habit for later in life.
* Set a specific time or times each month that your child can use his or her spending money. If a child can only use his spending money once a month, he will be much more thoughtful about what he wants to buy than if he is allowed to spend money every time you go to the store. This will also cut down on a lot of asking for things at the store—you can always say: “That looks like a great way to spend the money you have earned!” When a child has to spend his or her own money for an item, often the desire for it magically goes away!
* Be sure to set a positive example for your children of being wise yourself in your purchases. Do they see you buying frivolous things every time you go to the store? Do they hear you talking about saving money for a vacation or car? Do you show them how to shop around for the best deal on a particular item? You might think that your child is not paying any attention to how you spend your money, but, rest assured, he or she is watching and learning about this topic from you every day. When it comes to money management, children will remember your example long after they have forgotten your words on the subject.
* Allow your child to purchase what they want (within age-appropriate limits, of course) with their own money. Even if you know the toy they have selected will probably break before you even get it home, let them make their own decision. Impulsive buying decisions as a child have much lower stakes than they do as an adult. Better your child learn from his or her consequences when they are young and you are there to talk them through the process.
* Do not be hesitant to tell your child that you cannot afford something. Loving parents want to give their children much more than they themselves had as children and often go to great lengths to do so. But consider this fact: the lesson they learn through you being honest with them about money will last long after fancy trinkets, expensive vacations, and the newest gadgets are forgotten and gone. Children often easily accept the fact that there is simply not enough money for a certain purchase, and better they learn this self-control as a child than have to learn it the hard way as an adult.
Money management is a valuable skill that children should be taught at a young age. If parents invest hard work and consistency into this endeavor when their children are young, they will be well on their way to equipping their children to be financially successful later in life!