One of the many parts of responsible parenting is teaching your little ones how to handle their own finances. Now is the time to begin planting the seeds of good financial practices in their minds. Although they don’t have a lot of money now, the fundamentals they learn will serve them well when they are older and do have larger amounts of money to manage.
There are plenty of opportunities to start your kids’ financial education in their everyday lives. You can teach the basics of deciding how to spend their money by using tips like these:
Require them to save a set portion of their allowances. Teaching kids to save for long-term goals is paramount to teaching them to handle their money. Choose a use for their savings account and talk about it often. For instance, if your kids are putting away money to save for their college educations, begin talking about college. You don’t have to have definite plans now; just work the idea of going to college into regular conversations. You’ll build anticipation for their goals and help them look forward to their regular savings contributions.
Give kids something tangible to measure expenses by. The idea of money can be a hard concept to grasp. However, there are other ways to teach kids to value their money. You might explain to little Sam, for instance, that the new game he wants will require him to save his allowance for ten weeks. That kind of perspective can make it much easier for kids to grasp the concept of value.
Go shopping with your little ones. As they see items they’re interested in, inspect the price tags and explain to them why (or why not) that item is a good buy. You’ll get to explain to them about sales, shopping around, and discounts. My kids know to look for the red clearance tag at Target. Even the youngest one knows how to scan an item to check for the price!
Discuss the ads your kids see on television with them. In order to help the kids make savvy choices with their money they need to understand the ploys that ad agencies use. Point out the small print on sales offers. Talk about the unexpected costs that come with different purchases. The goal here is to teach your children to analyze each facet of their shopping decisions.
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10 responses so far ↓
1 Andy // Jan 27, 2009 at 3:33 pm
Some great advice here and the earlier you start kids on good personal finance the better off they will be in the long run.
2 Craig // Jan 27, 2009 at 4:45 pm
An allowance is a great way to show kids the value of a dollar and to help them with savings. You can help them implement a very simple budgeting system. For example, set up one envelope for a toy they want, and then they can take a part of their allowance and put some in each week.
3 John Lanza // Jan 28, 2009 at 10:42 am
Nice post. Talking to them about advertising is important, even at a young age. I recently tweeted about some alarming statistics regarding kids and media, https://twitter.com/johnlanza.
4 Jerry // Jan 29, 2009 at 7:13 pm
We are finding that our daughter understands a lot more about these kinds of things than we anticipated (she is 3), and it leads us to think that she is ready to start saving for things that she wants. Anything that will give us some insurance that she can understand the value of money, saving, and delayed gratification is welcome in our parenting efforts!
Jerry
5 Loan Modification // Jan 30, 2009 at 2:47 am
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