6 Tips For Teaching Your Kids About MoneySeptember 17, 2014
It’s time for ‘the talk’ with your kids. Don’t worry, not that talk – the one about money instead. Talking to your kids and helping them learn how to earn, spend and save money early on will help establish good money habits for life. It’s the ComparaSaver way.
- Give them money
It’s hard to teach kids about money if they don’t have any of their own, and an allowance will set the stage for healthy money management in the years to come.
So when should children first be given an allowance, and how much is enough? Financial writer and TV host Gail Vaz-Oxlade recommends starting at five or six-years-old. Her advice is one dollar for every year of age—so a 9-year-old would get $9 a week. Have them set aside 10 cents of every dollar as savings, and then encourage them to talk about how they plan to spend the rest.
- Give them a bank account to call their own
Kids learn by doing, and developing good saving habits can be as simple as opening and managing a bank account.
- Give them tough love
Part of allowing kids to manage their own budget is letting them learn from their mistakes. If they spend their money on an impulse purchase and can no longer afford a trip to the movies with their friends, consider not bailing them out. Learning to successfully budget at a young age can avoid potentially disastrous spending mistakes as an adult.
- Give them choice
It’s no secret comparison shopping can save you money. This is a great skill to teach your kids while they’re young. Help them comparison shop for something they want. If the toy they’re after is $20 at one store, how much is it at a competitor’s store?
- Give them incentive to earn more
Everyone has chores to do around the house; it’s part of being a family. But, if there’s extra work to be done that you might otherwise pay someone else to do, turn it into a money management lesson. Offer them the chance to work for the money, showing they have the ability to take control of their financial situation. It’s a soft introduction to the world of working for money; one where you control the intensity of the tasks they’re paid to do.
- Give them a seat at the table when paying bills
Let your child see you plan your own budget, pay bills, and shop for the best deal. It’s an ideal way to talk to your children regularly about saving and budgeting, and gives you the opportunity to discuss how you make it work.
Teaching Kids About Money: The Bottom Line
Money management is a life skill, most often learned at home and your kids will learn it through their own experience and from watching you as well. It’s not just one talk, but many which is why it’s important to communicate regularly about budgeting, spending wisely, debt, and saving. What your children learn from you in the next few years, will help them over their entire lifetime.