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Money provides people, both old and young, with the opportunity to make decisions. Empowering, motivating and educating your children to save and invest regularly enables them to keep more of their earning and get more out of their spending. Daily spending habits have a huge impact on your children’s financial future. Here are a few basics you should teach them.
1. As soon as your kids learn to add and subtract, introduce them to money. Actively teach them the basic noting that repetition and observation are two main ways children learn.
2. As your children grow, communicate with them your values regarding money. Let them know how to save, make it grow, and most essential, wise spending. 3. Help your children learn how to distinguish between wishes, wants, and needs. This way, you prepare them to make wise spending decisions when they are adults. 4. Goal setting is crucial to learning saving and value of money. You can’t reach goals that you haven’t set. Almost any item or toy your child asks for can be the object of a goal. These goals help the children learn how to be responsible for themselves.
5. Let them know the importance of saving rather than spending. Introduce them to the concept of interest earned on savings. As they get older, teach them the power of compound interest. Also, older children need to know that a history of regular saving improves their credit rating.
6. Teach about debt
. They should learn how to make wise decisions about when and how much to borrow.
The following are some ideas regarding teaching them about spending decisions.
1. When giving your kids an allowance, let the money be in denominations that encourage saving. For instance, if the allowance is $5, give them five $1 dollar bills and encourage them to set aside at least one dollar in savings.
2. Take your children to a bank or credit union and open for them a savings account. Inculcate in them a habit of regular saving early on so that it follows them through to their adulthood.
3. Encourage the habit of keeping good records of money spent, invested and saved. This is an important skill for young people. By learning to keep track of their expenses, they can make smart budgets and wise spending decisions.
4. Make use of regular trips to the grocery store to teach your kids about the value of money. Grocery shopping is typically a child’s first experience of spending. Smart spending at the grocery store can lead to substantial savings for your family. It is a good idea to involve your children in the making of some of the spending decisions.
Teach your kids how to evaluate print, radio, and TV ads for products. Can the products actually do what the commercial claims? Is the product’s price consistent with its true value? Are there alternative products? They should learn how to determine whether or not a product might be too good to be true.