As a conscientious parent, you are dedicated to teaching your children the sorts of skills they’ll need to get by as adults. Lessons learned at a young age tend to stick for life. You teach your kids the right way to eat and you offer advice with homework, too. How about financial lessons? Your kids have a better chance of succeeding if they grow up understanding a few essentials about money.
Never too young to learn about money
Believe it or not, most kids have the capacity to grasp a number of financial concepts when they’re as young as three years old, says Forbes magazine. Take advantage of money teaching opportunities now, and your progeny are sure to develop good money habits that can last a lifetime.
Between the ages of three and five, help your kids understand the concept of delayed gratification. When they want a new toy or wish to attend a special event, show them how to set aside money and wait. When you go shopping for a gift for a playmate’s birthday, let your kid know that you’re at the store to buy a gift for someone else. This helps kids get the idea that they don’t need to spend money willy nilly every time they enter a store.
Rule of three
Label three similar containers three different ways. Label one “Saving,” label one “Spending,” and label the third container “Sharing.” Whenever your child earns money or is given money as a gift, show them how to divide the money into equal parts and place it in the appropriate container. When your kid wants to make a small purchase, allow them access to the Spending container. Help your kid find a good cause to donate the money in the Sharing container. Keep the Saving container untouched, except to add money. Let your child decide the goal they wish to save toward. You may add an incentive, such as matching their money when they’ve attained half the goal they’re aiming for.
Between the ages of six and ten, teach your kids that money is a finite commodity and they should spend wisely. Describe situations where someone -perhaps you- spent money on something silly, then would up short on funds for something they really want.
Living within available means is a lesson not always learned in childhood. If it were, fewer adults would have trouble managing money. For this and other reasons, giving kids an allowance can be a great way of teaching them how to spend and save their money smartly. When kids are pre-teens, it’s a good time to help them open a savings account at a bank that offers interest. You might want to teach them how to apply for fair credit, too.
Money management isn’t as hard as it seems, especially for kids who learn early in life how to save, spend, and use credit wisely.