The world of finance has changed a lot since you were a kid. If you are currently raising children of your own, do you know how you’ll set them on the path to financial success? In the interest of savvy parenting, we are pleased to present a few valuable tips about how to talk to your daughters and sons about money and how to manage it.
The sooner you talk to your kids about money, the better
Much like the good old “birds and the bees” conversation, a sit-down talk to discuss finances with your kids can be difficult. This doesn’t mean you shouldn’t do it. On the contrary, experts say the sooner you talk to your kids about how to manage money, the better.
Many kids get their first inklings as to how to manage money when they start receiving an allowance. Take this good idea to the next level when you help your kids build a budget with that allowance. By dealing with real-world examples, your kids will learn how to plan expenditures. Monthly expenses such as special snacks, new toys, and a portion of school clothes costs may be factored into your child’s monthly budget, recommends Nerdwallet magazine.
It makes no difference whether your family is super wealthy or of more modest means. Every parent needs to talk with their kids about cash, and yes, that means rich parents, too. Family wealth coach Joel Treisman reminds wealthy parents to also teach their well-to-do kids about privilege, philanthropy, and gratitude reports the New York Times.
Help your child set long-term savings goals
Sooner or later, your kid will ask you to buy them something that costs a substantial amount of money. In lieu of rushing right out and getting them what they want, explain to your child ways they can earn and save money toward the purchase of their desired object. Whether the treat they crave is a video game or a fancy pair of athletic shoes, encourage them to set aside a portion of their earnings and/or allowance toward their financial goal. For younger kids, parents may offer to chip in once the child has saved up half the price of the thing they want to buy. An at-home or in-the-bank savings plan such as this one paves the way for bigger financial decisions about things like college tuition in the future.
All about earning
Elementary school age kids of a certain maturity may be able to earn their own spending (and savings) money by taking on a variety of simple jobs. Petsitter is a great job for a little kid and generally entails stopping by a neighbor’s house to feed their animals while they’re away. Walking dogs and cleaning up after them may also be included in the pet sitter job description. Appropriate for kids of most ages, pet sitting is a responsible, albeit a low-commitment, job that can provide your child money to spend as well as money to set aside in savings.
Older kids can take a Red Cross lifesaving class and learn to be a lifeguard. Typically a summertime life-saving job can teach kids all sorts of responsible behaviors while adding to their personal coffers, advises The Balance magazine.
A word about borrowing
Very young kids may have no clue about the financial obligations of a family. For the same reasons, they don’t know a thing about loans, either. This is a good time to teach them about borrowing. Ask your kid to pretend that they’ve loaned a friend three dollars to buy lunch. When the friend pays them back, they include a bag of potato chips as ‘interest’ on the loan.
If your own finances go a little haywire before the end of the month, allow your kid to see you apply for a small loan at a reputable loan company such as https://kingofkash.com/wisconsin/milwaukee-personal-loans/. Explain how the loan will be paid back with interest, much as their imaginary friend repaid their lunch loan with three dollars plus a bag of chips.
Money is money. And, like anything, it can be used and misused. If you take the time now to teach your kids about ways to earn money and how to spend and save it wisely, you’ll be doing your whole family a big financial favor. The younger kids are when they begin to understand the concept of money and what it can do, the surer they are to have a good financial footing in the future.