When it comes to parenting skills, most of us aren’t doing a very good job of teaching our kids about money management and personal financial responsibility.
Some parents think kids will learn about money management by themselves when they get older. Others simply want to shield their kids from what they consider the harsh realities of life.
The truth? Kids learn by example.
They learn how to manage their money by watching how their parents manage money. And the earlier they get exposure to proper money management, the wiser they will be with money later on in life.
Tips to teach money management to kids
What that in mind, here are some handy tips and simple principles for teaching your kids all about how to handle money in a responsible manner:
- Money comes from work, not from an ATM
There is no free lunch in this world, everybody has to work hard to earn the money they spend.
- What we want may be different from what we need
Toys and candy are not necessities, so buying those groceries and school supplies comes first. That’s why Mom and Dad always pay for the rent before they book that expensive vacation.
- Save money towards specific goals
If your kids dream about purchasing something big (like an iPhone or a new laptop), they should have to save up for it. Getting in the habit of saving for the future should be a priority in your household. How to do this easily? Place 10%-20% of your net monthly income into your saving account automatically when you get paid. That process then becomes a habit, and money is put aside without stress.
- Money can make more money
If your kids have a long-term goal in mind (like a vacation or the purchase of a car when they’re old enough), they need to learn how to invest their money properly. Obtain the services of a financial consultant to explain to them how to save efficiently and effectively.
- A Credit Card is not a fun toy – Use it wisely
We all have to pay back the money we borrow eventually. If we only pay down the minimum amount each month it’s likely we will never pay down the balance owing for many years. That also means a higher amount of interest must be paid just to use that credit. Your goal should be to pay down the full balance on your cards each month. If you get in that habit early on, your use of credit won’t exceed your ability to pay it off quickly.
And you’ll be setting an excellent money management example for your children. Now – and when they grow up.
Do you need help with money and/or debt management yourself? Apply for a free consultation with one of our licensed debt professionals.