When you have kids, you want to teach them about the best ways to do many things in life. Money is certainly no exception to that rule. Teaching your children how to be responsible about money early on is a good way to ensure that they carry those lessons on into adulthood. There are plenty of ways to instill good money management in your kids.
Start Early
First of all, you will want to start teaching your kids early on about good smart financial habits. Generally, the best way to start is when they reach the age of five. At this age, children may begin asking their parents for an allowance. However, no matter what age your child is when you start giving them an allowance, you should encourage them to only spend a portion of it so that they have some money left over when next week’s comes to them.
Use a Clear Jar for Saving Money
While a piggy bank is cute and a good idea, in general, you should opt for a clear jar for children to save their money. It gives them a visual sense of what they have and can give them a sense of pride at the same time. One day, your child can see that they had only a few pennies, but the next, there may be some dimes and quarters in the jar. Over time, they will even have a few dollars. This is a huge deal to kids. It teaches them that saving their money allows that money to grow, which makes them feel good about themselves.
Teach Them About Budgeting
Teach your kids about how to budget when they spend their money. Tell them that they can buy things they want but should set goals and stick to a certain amount, so that they still have money left over. For example, if your child decides they want to buy a new toy with their allowance, you can set a specific budget that they can spend toward that item. Also, you can show them how they can get it for the lowest price instead of getting the first one they see, which might be the most expensive.
Teach Them to Avoid Impulse Purchases
As kids get older, they might want to make an impulse purchase when they see something they immediately love because they feel like they need it now. However, when that item is on the pricier side, it can cost them more than just too much money. Tell them that this thing they want so badly will still be around tomorrow and next week and that they should wait until it goes on sale. Encourage them to also keep their receipts just in case. This instills in your child a better sense of spending their money.
Talk to Them About Smart Credit Card Usage
By the time your child reaches their teens, you should begin talking to them about credit cards. While they can’t sign up for their own account until they reach 18, you can start early and encourage them to be smart about using a credit card. Explain to them about staying within 30 percent or less of the card’s credit utilization ratio so that the credit score can be good or even excellent. You may want to add them to your account on a shared credit card so that they can start using it and learning about responsible credit usage when they reach 16 or 17. Teach them about paying their bills on time and in full so that they can maintain a good credit score and responsible usage, in general.
These are great ways to instill good money management habits in your kids. Start them off early and continue to teach them well into their teen years.
