Teaching children about money from a young age is a great way to set them up for success later in life. When children properly understand money basics it promotes wise financial decisions as they age. While money can be an intimidating subject for parents to talk about with their children, this list can give you some ideas on where to start.
Teach Children to Earn Their Money
Allowances don’t need to be handed out as if they are a constitutional right. In the adult world money is earned. This lesson can be started with children well before the appropriate age of their first job. A small child can be expected to make their bed, clean up their room, and take care of their dinner plate. Encourage them to help you fold laundry and tidy up the living room for money for their piggy bank. Allow older children to earn their allowances by doing extra chores above their regular expected chores so they have the choice to earn money such as mowing the lawn or washing the car. The amount of money that children earn will directly reflect the amount of work that they put in teaching them that money is not handed out and takes hard work to come by.
Stick to a Budget
You have a budget for what you can spend each month. That amount cannot exceed your earnings except for unforeseen circumstances for which you have proactively saved for. Talk to your children about this budget each month. Tell them as you go to the store how each item fits into your budget and have them help you plan meals around the items you were able to purchase. You can even have them plan a meal and then shop for the ingredients themselves so they can see the different options they have within a reasonable budget.
One of the most important factors when teaching children about money is to say no when things don’t fit in your budget. Talk to your children about why the new video game console isn’t in your budget and then help them to create their own plan of earning and saving money to buy it themselves. Teach them what is negotiable in the budget and what isn’t by showing them that purchasing this item means they cannot purchase that item.
Be a Role Model
Children learn more from what they see than what they are taught. Pay your bills on time, donate to good causes, and do not live above your means. Do not shy away from money conversations, even ones where you admit your mistakes, because every opportunity to discuss money is an opportunity for your children to see what works and what doesn’t. Show them healthy money practices and they will learn the same values that you hold.
Care Financial is a privately owned and operated business providing families, individuals, and businesses with comprehensive wealth management strategies. Contact us online at www.carefiancialonline.com or call us at 251-633-7122.
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