5 Ways To Teach Your Kids Money Management
If you don’t teach your kids money management correctly, they will learn the hard way. That isn’t a risk any parent wants to take. Luckily, there are some creative and easy ways that you can give your children the very best start when it comes to understanding money management. Here are five ways to teach your kids to be responsible with money:
1. Set Them Up With A Loan
The simple lesson is, everything borrowed has to be paid back. In the same way, you can get small cash loans and pay them back, you can set that up for your child, with you as the lender.
Perhaps they want something worth three weeks’ pocket money, but they only have one week’s worth of pocket money. They could loan the money from you, with an agreement that they pay you back within a certain amount of time. Then, it is up to you to set up the consequences if they don’t do this, or if they are late.
2. Be The Example
Studies show kids have formed key financial habits by the time they are seven-years-old. With that in mind, it makes sense that you should be setting an example around your kids all the time, even when they are very little.
Openly talk about saving, budgeting and being frugal in the house. Play with money and get them helping with the shopping lists from when they are very little. These skills will be a fun part of play while helping them form useful habits.
3. Create Saving Visuals
It’s handy for kids to see visuals when it comes to saving. Get a glass jar and let your child decorate a label to stick on it. Talk them through saving in the jar, and make a huge deal out of it filling up. Alternatively, teaching them about saving, spending and giving, with this DIY Youtube video is a great idea.
4. Teach Kids To Be Patient
Statistics tell us that nearly 50% of Americans do not have enough cash to cover a $400 dollar emergency. Prioritising money is handy for kids to learn, so they avoid being impulsive and stuck in this common scenario.
Teaching kids to wait for a bigger reward, however, is easier said than done. One of the best ways to do it is by teaching them patience and delayed gratification first. You can then utilise these skills in relation to money and prioritisation. For example: spend now and get one chocolate bar, save for longer and get two chocolate bars.
5. Give Kids The Chance To Earn
When you teach your kids money management they need to understand where the money comes from. Stuff costs money, and money is earned. If they are young, it is important that they understand money doesn’t just come from birthday cards or Grandma. Start providing the chance for them to earn money in all kinds of ways. Here are some ideas:
- Washing the car
- Washing the dishes
- Brushing the dog
- Walking the dog
- Emptying the trash
- Mowing the lawn
Of course, it is important to be careful with these chores as kids also have to learn that there are some things they have to do because they are told. What you can do is provide a base list of chores that have to be done, without payment before any extra chores can be done at a payment.
Money isn’t everything in this world, but it is important. Teaching your kids important financial lessons like those above will help your kids thrive as they move into adulthood.