Teaching children about money is an important step in a parents life. How you teach your children about money will stay with them into adulthood and could mean the difference between them be riddled with debt or having a happy future.
There are two basic things that people can do with money, once they have it. They can spend it and they can save it. This lesson is broken into those two categories. Start off by teaching your child how money is made, through work. Then, go on to what they’ll be doing with their hard earned money.
Teaching About Spending
Spending money isn’t just about shopping. It’s important that children learn that bills and responsibilities come first, before fun and frivolous spending. This is where you will teach you child about having a checking account, writing checks, and about budgeting. A checking account gives them a place where they can put their money in order to use it.
When it comes to budgeting, your child will learn how to determine what money goes where and how much they do have leftover for fun. Make sure that they know what kind of bills adults have, from paying for the cable television to buying groceries. They need to know that all of this comes before new clothes and trips to the movies.
One of the most important lessons on spending is about the use of credit cards. Make sure that your child understands that credit cards are not access to free money. If they are not paid off it can severely damage your credit making it nearly impossible to get future credit cards or loans. Loans are important when it comes to home or vehicle ownership.
It’s also important that your children understand the importance of saving money.
Teaching About Saving
There are different kinds of savings accounts, from a Christmas savings account to a normal savings account. Why is saving money important? It gives you money for emergencies, for big purchases and for the future. Children need to know that saving money can help them be homeowners in the future.
Saving for the future should start at a young age, even if it’s just saving change in a piggy bank. This helps children understand its importance and learn to leave saved money alone. You can also have them save up money from birthdays and other holidays and let them use it on some big purchase after a year or two.
These are just beginning tips for helping your child understand money. Take them shopping with you, let them help with a budget plan and with paying the bills. All of this hands on work will help them grow into responsible adults. You can start this at any age in which you feel your child is ready to start understanding money, the sooner the better.