Every parent wants their kids to understand the value of money and hopefully develop healthy financial habits. Recent research shows that most parents give their kids some pocket money, but a staggering 85% of those parents don’t make those children earn the cash they get.
Money management skills shouldn’t be learned when a person reaches adulthood. After all, the schooling system doesn’t teach kids any kind of financial education. If parents don’t take some time to instill savvy financial habits in their kids while they’re still young, they’re likely to grow up struggling with money problems.
So what can you do to teach your kids good financial habits?
Teach the Value of Earning
Lots of parents give kids an allowance for the sake of providing spending money. However, asking your kids to contribute towards simple chores and tasks to earn their cash teaches them the value of earning. It also reinforces a stronger connection as part of a family unit when everyone in the household is expected to contribute in some way.
As your child gets older, you might want to increase the opportunities to earn more money around regular school and homework tasks.
Teach the Value of Spending
Once your kids have their allowance, let them spend it how they choose. Give them the chance to make mistakes, as they provide valuable learning experiences.
If the kids spend everything they earned, it’s important they learn to wait until the following week until their allowance is due again. Spending everything right now and running out of money is a great way to teach kids about budgeting and saving.
You’ll find more tips on handling credit cards and consolidating debts responsibly on the website here.
Teach the Value of Saving
Kids need to understand that they can’t always afford the things they want right away. The best way to teach them the value of saving is to explain about putting aside money until it accumulates into enough cash to cover the bigger expense.
Find a novelty money box for kids to put spare change into. Spare change never seems like much, but it really can add up quickly. It’s also a great way to encourage children to count, add, and learn to value the feel of handling real cash.
Some parents are happy to encourage kids to open a children’s savings account. Some banks and credit unions offer kid’s banking accounts that pay a little interest on the savings. If your child has saved some money from their allowance, encourage them to deposit it into the bank.
Alternatively, if you prefer to keep your children’s savings at home, you can teach them to monitor their cash using an app such as Jangle. The app encourages kids to save for toys or games and teaches them to take control of their finances at an early age.
Personal finance education is crucial for young people. The more responsibility they have over their finances at a young age, the more likely they are to become financially successful later in life.