Teaching Your Kids About Finances
It's common knowledge that if you yourself as a parent, set a good, solid financial example to your kids … they will grow up as financially responsible adults. Well, sometimes this concept alone is not enough. However, the old saying still holds true: "Kids will do as you do … NOT as you say." It's just human nature. Whatever your kids see you doing will tend to set a general pattern for them. Your kids will be watching you, so you need to set a good example when it comes to finances and money.
We all learn the basics of money in grammar school … but learning about money and being responsible with it is two very different things. It's so vitally important (especially with the unfavorable economic conditions today) to expressively teach your kids about the value of the all-American dollar. How do you do this? There are many things you can do to go about guiding your children to be financially responsible.
Good Saving Habits
You can never start too early. Purchase each child a piggy bank and start teaching them good saving habits. Start them off by you, yourself putting some change in each one that may have been around the house, or throw a couple of dollar bills in them from your own pocket. Tell them to put money in the bank on a regular basis. If they find loose change somewhere … tell them to put it in the bank. Do not give them the chance to spend it.
If you and your spouse have a savings account, openly discuss it and talk about ways to be able to invest more in your savings. Let your children actually hear your conversations. Your kids will pick up on this more than you think.
Have your children go shopping with you. As you are shopping for bargains … explain to them how much you will save by making a particular purchase versus another. Be sure and tell them just how much money you are saving. Teach them to buy in bulk sizes versus buying just one of a particular item.
Parents have various opinions about giving their children an allowance. Some parents are all for it, and some are not. I personally believe that paying an allowance teachers your kids about working and earning money. Make a list for each of your children of the duties that you realistically think that they can do, depending on age. Remember … this is only beneficial if your child really completes the duties that are on their list. If they do not do what they are supposed to be doing, but yet you give them an allowance anyway … they really are not learning anything are they? If you give an allowance, stick to your guns and make them do their share of the work to earn that allowance. I think it's a good idea to get them to save at least half of their earnings … this reinforces good saving habits.
To encourage saving even more … you can award them with an additional amount of money according to the amount each one has saved at the end of a month, two months, or three months. Make the award a percentage of what the child has saved up as interest.
Include Your Children In Family Financial Decisions
Firstly, it's important to sit down with your kids and explain to them where all the money goes out of your paychecks. Tell them how much each of you earn and exactly how much goes out of your pay to pay all the household bills. It would help to actually make a chart with the family income and all expenses. If you have an office … this would be an ideal place to display the chart.
If you are planning to say for instance, some home improvements for the year, sit down with the whole family and discuss exactly how much the home improvements will cost you and also how much money to save up each month to be financially prepared to do the projects . The same goes for saving up for family vacations. Any big expenses that arise, be sure and discuss it with all the family members. This will further instill good financial planning and saving habits.
Realistically, a person never really learns the true value of a dollar and how to manage finances wisely until they are fully on their own and making their own money. But … the time invested in teaching your kids the basics of finance will pay off and it will certainly help put them on the right track by encouraging good habits now.