One of the most important things parents can do for their children is teach them the value of a dollar. Helping them learn the skills necessary to manage money effectively can be done at any age, and it’s much easier than you think. Take steps to educate your child about personal finance with these four tips from experts at Parents Magazine.
1. Give a weekly allowance.
How much to give your child depends on your own financial situation, but a good rule of thumb is to give them an amount equal to half their age (i.e., $4.50 for a 9-year-old). It’s also important that this allowance doesn’t rely on whether or not a child completes his or her chores – helping out around the house is something children should do anyway, regardless of an incentive. You can always give them opportunities to earn extra cash with other chores outside of their expected routine.
2. Set savings goals.
If your child expresses interest in a big-ticket item, help him or her set a savings goal. Your child will not only learn the rewards of saving, but also see firsthand how transactions work. Try to hold back your opinion if you think your child is wasting money – buyer’s remorse is another great lesson for kids to learn, and it will help them become much more conscious of their spending.
3. Be a role model.
It’s important to lead by example. Your children will never know how to be responsible with money if you aren’t. A trip to the grocery store is the perfect opportunity to demonstrate sensible money management in several areas – budgeting, using credit cards, and purchasing sale items, for instance.
4. Make it fun.
Becoming skilled at managing finances doesn’t have to feel like school. Board games like The Game of Life and Monopoly Jr. can be especially helpful when teaching some of the basics. In addition, try to keep any serious money conversations away from your child’s ears – it’s never a good idea to associate money and stress!
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