Teaching your children about money is important so that they will learn how to handle their finances well. Here are several tips on how to teach your children about money.
Talk About Money
When children are young, they don’t normally understand that it takes money to survive. If they have a roof over their heads and their bellies are full, they probably don’t think much about money at all.
In order to teach your child about money, you first need to start conversations about money, just bring them into everyday conversations about how things cost, and how you are able to provide for your family.
While children may see you using money to pay for things, they may not understand all the intricate details of it. They may not understand that credit cards are very powerful tools and how they can be used for good and bad ways in regards to money.
When a child complains about how their parents work too much, explain that you go to work to provide for your family, and how your income from your job helps pay the everyday bills, including the house they live in and the food they eat.
Teaching the value of a dollar
When children are old enough that they start learning simple arithmetic, the conversations about money should deepen.
You can talk about loans and how they are used for good things like getting an education, or bad things, like buying things you don’t need. This is a great site to learn more about loans.
Giving your child an allowance to manage also helps instill the value of a dollar. With a chores chart, a child can earn an allowance based on how many chores are completed. They should then have a piggy bank where the money gets deposited. Depending on what your family’s focus is, it might be helpful for the child to split up their allowance into several piles, such as savings, donations, “taxes,” gifts and spending money.
When children are even older, it is good to open a checking and savings account for them if you haven’t already done so. My parents also opened up a $500 limit credit card for me at 14. I now realize the value of having a card in my name at such a young age because a) it taught me how to use a credit card responsibly and b) my credit history is much stronger than my husband’s, who didn’t open a credit card until he was 18.
These are not all concrete mandates, but rather helpful suggestions to get the conversation flowing and on the right path of teaching your child about money.
How do you teach your child about money?