Most parents are great at focusing on life’s necessities – ensuring that their children are well fed and clothed, that they go to school regularly, and that they’re protected against the evils of the world. Unfortunately, many parents neglect an important lesson that can be taught to children right in the home- how to be successful with money.
Even if you have made financial mistakes in the past, with a little creativity and common sense you can share some important principles with your children. The following simple steps will help you to teach them about financial responsibility, and hopefully leave an impression that will ensure their success with money in the future.
Be a good example
The most important guide for your kids is for youto be a good role model. Children live what they learn. It’s almost impossible to teach children that “money doesn’t grow on trees,” when every other evening their parents stop at the ATM to withdraw from an apparently endless source, to purchase unnecessary items.
If parents have a nonchalant attitude toward paying bills on time, or if they are always distressed when talking about money, these negative attitudes will be ingrained into their children’s mind. So if you have difficulties with your finances, the first step is to seek help from a financial expert who can help you to regain control and to be more successful managing your money.
Teach them how to make money
It’s easier for children to grasp the principles of money when they have some of their own. If possible, give them a small allowance that’s appropriate for their age. You can also help them to become creative in making money. Buy decorative items that they can use to make Mothers Day or Christmas baskets and sell to their friends at school. If they are old enough they can volunteer to baby sit the neighbours’ children for a small fee. While encouraging them to earn, it’s important also to teach them not to expect a monetary reward for every chore done around the home.
Teach them how to save
The first money lesson for children to learn is how to put aside at least 10% of the money they earn or receive as gifts into a savings account. This will introduce the concept of deferring immediate pleasure for long-term gain. For small kids, give them piggy banks where they can deposit loose coins. Make a production of breaking open the bank when it’s full and count the coins to show how small cents can add up to several dollars. For older children, take them to a financial institution and let them open their own accounts. Give them their bank books, so that they can keep track of how their money grows.
Teach them how to budget
An important part of money management is learning how to make smart spending choices. Draft up a mini-budget for them to see how their money is used every month. If your children want new toys, show them how they can put money aside until they have enough to buy them. They will appreciate their toys even more when they had to save up for them! Give them incentives like matching the amount that they have saved towards the goal. Let them make choices like buying a new game or having money to go on an outing to the beach. This will give them a sense of control over the choices they make with their money.
Teach them how to spend
Take children to the supermarket and let them compare prices and see how they can save money by spending wisely. This is also a great opportunity to include fun lessons in reading, spelling and simple math, while teaching them how to spend money. Let them pay the cashier and get back the change. Teach them to call around to different stores to get the best price for an item that they would like to buy.
Teach them to be content
While it’s important to educate your children about money, it’s also essential to make them understand that true happiness doesn’t come from material things. Teach them be thankful for what they have and to be content with the simple pleasures of life that money cannot buy.
© Cherryl Hanson Simpson