We all know that money doesn’t actually grow on trees. But if it seems like your kids think it’s easy to come by, you may be right. With ATM machines “magically” dispensing bills and plastic cards being swiped in exchange for goods, it’s not hard to see why kids may assume that money is there to take for granted.
For them to develop lasting positive financial habits, it’s important to talk to our kids and educate them on the value of money early on. Teaching them to appreciate the “stuff” that money buys, the importance of savings and the importance of personal responsibility will help set them up for long-term success.
Below are some tips to raising money-smart children:
Lead by example
The most important thing to remember when raising money-smart children is to lead by example. When you and your kids run errands, use cash as much as possible so they can see first-hand the value of everything you buy. Allow them to help count out the dollars and cents and communicate how much you have left to spend. Try not to make impulse purchases or use the credit card once the cash runs out!
Talk about money
Rather than keep the family finances under wraps, discuss purchase decisions and savings at the dinner table. And consider showing your children your bank account statements or online account balances so they’re aware of your economic situation. Involving your kids in spending decisions and being open about your finances will provide them with practical financial experience and help them feel like a valued part of the spending and saving process.
Give an allowance
Giving an allowance is an excellent way to teach your children about money management and personal responsibility. Receiving an allowance in exchange for chores will help them understand the value of an earned dollar. By earning their money, they are more likely to save it for something meaningful rather than something trivial.
Put savings on display
Whether they place their money in a piggy bank or in a glass jar, showcasing the savings they have accumulated will help motivate them to continue. Seeing just how much money is saved will also help your children think twice the next time they want to spend it.
Open a savings account
Once your children have some money saved, it’s time to open a savings account. Make the experience fun and interesting by going to the bank together and encouraging them to ask the teller questions. Maintain the account by depositing any money they receive from birthdays or holidays. Print off account statements every once in a while to show them just how much interest they are earning on their balance.
Give positive feedback
Be sure to provide positive feedback whenever you see your kids using their money wisely. Motivation and positive praise go a long way when teaching kids new information and skills.
In today’s economy, teaching our kids how to be money-smart is essential to their education and overall success in the future.