Personal finance is a tricky subject, and can take years to fully understand. Learning to save and be careful with money can be a very hard lesson to comprehend. This is why parents should start instructing our children on how to save as early as possible. This way, you will be giving them a much-needed head start when they are thinking about how to make their way in the world. There are several methods that you can use to start teaching your children. Some of these will usually work better than others, but it really depends on the child in question.
Don’t Give Them an Allowance
This may be an unpopular opinion, but it is actually detrimental to hand out money to your children for no reason. If they start to get used to this, they will simply expect you to give them cash whenever they want to buy something. Then when they grow up, they will be confused when that luxury suddenly disappears. It is different if you are awarding your child an allowance on the condition that they complete certain chores to satisfaction. This means that you are paying them to complete a job, which is more like what real life is.
Help Them Find a Part-Time Job
Your child need to understand that if they want to spend money, they must earn it first. This can be done by showing them how to work for it. Helping them get a part-time job after school and on weekends can show them that their hard work can pay off! For example, you could talk to your neighbors and arrange for your children to cut their grass if they are old enough to do so. If they have to supply their own tools, you can give them a hand with that too. Reading reviews at Backyard Boss will demonstrate different tools and their uses. Your child will be able to differentiate between valuable tools that will pay for themselves, and poor quality tools that won’t.
Open a Bank Account
Often, children get the false idea that money is simply generated through the ATM. This is because they see their parents take money out of it, but never put anything in. By opening a bank account for your children, you can show them how to put money in and see how much they have saved. As well, the concept of earning interest on their money can be introduced. Every few months, you can show them how much money they earned, simply by having something in their bank account. If your child wants to save up to buy something in particular, they can have some set aside for that, and the rest can be kept safe in the bank.
Be Careful About Money Yourself
You are going to have the biggest impact on your children. They are going to watch you, and copy your habits. This is why you should try to make an effort to be conscious about money. Do not buy something just on a whim, especially if you are shopping with your children. Going out for dinner can be a lot of fun, but should not be multiple times every week. Showing your children that dining out is a luxury, and not a necessity, can set them up for their future. Have lots of open talks to your children about money, and hopefully they will start to understand!
Some parents think that avoiding the topic of money with their children is the easiest way. Perhaps it is easier at first, but it is not helpful in the long run. Your children will grow up not understanding how to manage their money, and they will keep coming back to you to bail them out. Avoid this by not giving them an allowance, helping them find a job, opening a bank account and leading by example. Utilizing these methods are a good way of teaching your children about money and saving it. If you are still having trouble reinforcing the concept, try talking to the teachers at your children’s school. They might be able to incorporate more about personal finance into lesson plans.