For parents, their greatest hopes are that their children will grow up with proper money management knowledge and be able to one day have a job and afford a home for their future families. It seems that kids today find it hard to understand the value of money. Today’s world is filled with micro transactions where downloadable songs and Apps can be purchased in mere seconds. The old saying, “Money doesn’t grow on trees.” no longer illustrates to most children how hard it is to actually earn and save money.
The younger they are when parents begin teaching kids about money, the better habits they will have when they get older. When they’re very young, they need to know why they can’t just take every good looking item off the store shelf and put it in the shopping cart, and it’s important for them to understand what the word “afford” means.
The following tips are fun and exciting ways parents can get their kids in the right mindset when it comes to money management. Just remember that the more fun you make it for kids to learn, the more eager they will be to retain the lesson at hand.
Saving Money With A Piggy Bank Or Bank Account –
The first thing parents should teach their kids about is how to save money for when they really need it. A piggy bank or another cute animal bank has been the longtime tradition that parents have used to teach them on how money can be deposited away for safekeeping. When kids get a little older, many banks will allow them to open their first savings account under their parents’ supervision. Bank accounts are a great way to learn how to manage money effectively. In the meantime, it’s a good idea for parents to incorporate chores around the house for kids to do as part of an allowance earning so that way they understand the concept of earning money in order to save money. There are even games and fun videos out there that parents may want to use to introduce kids to earning, saving, and investing.
Showing How Cash Has Limits For Spending Money –
While saving has the top priority, children need to learn how to spend money as well so that they know what they should spend it on, and how to avoid overspending. One thing parents should be aware of is that constantly swiping a credit card becomes noticed by kids, and it can lead to the wrong thinking of credit, giving them an unlimited amount of money to spend. When parents use cash in the store and even let their kids hand it to the cashier, they can better understand how things cost money and why it needs to be spent on important things such as healthy foods and household items. While they may not yet be able to pick up on all the concepts of budgeting, parents can certainly talk about why they spend money on things that will last for a while and not on useless items that could get wasted.
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Teaching Kids The Joy Of Using Money To Help Others –
Along with saving for essential things and spending wisely, parents should also teach children about how money can change people’s lives and why it’s important to share money or donate to a charity. One of the best ways this point can be driven home is to talk about kids who live in poorer countries who may be orphans and don’t have the things that most kids in America have. Parents can encourage their kids to give a few coins or dollars to kids overseas through charity groups. Or they can also teach them how to share money by participating in penny drives for local organizations such as animal shelters, or even getting them involved in putting coins in the offering plate at church. But kids can usually understand very quickly how giving money makes them feel good about having helped someone in need.
Start An Allowance Jar –
It doesn’t matter if you pay in pennies, nickels, dimes, or quarters. You can also pay in dollar bills, but that’s only advisable for children past the age of eight or so. Make sure to divide each jar up into “Spend,” “Save,” “Share,” and label them each as such.
Pay Based On What Your Child Accomplishes –
Make an allowance based on your child doing chores, getting high grades on a test and anything else you can think of as positive reinforcement. Depending on your child’s age, use a sheet with stickers, and pay a coin for each accomplishment at the end of the week or month. Children love to receive stickers because it gives them a sense of tangible achievement, and being able to cash them in for money makes it even better.
Save, Share, And Spend The Money –
Make your child put a coin or dollar bill in at least each jar per week. If your child wants to save up for something more costly, tell them to put the remainder of their earnings into that jar. This will come in handy later when you’re teaching skills like price comparison and even the idea of wages.
Have Your Child Start A Business –
It doesn’t matter whether it’s starting a lemonade stand, offering to mow the neighbor’s lawn, or just watering an elderly neighbor’s flowers. This is an excellent way for a child to learn what the value of a dollar is based on their time, and it’s a great way to make the transition from allowance to actual earned income. It’s also a great way to teach children that they need to make more money in order to get something more expensive sometimes.
Do Price Comparisons While Shopping –
You will be surprised how quickly your child notices the difference between one toy and the next when you make a price comparison, even if it’s just a few pennies. The grocery store is also a great place to try this out. Show them how much money you were able to save in the end by comparison shopping and also using coupons.