1. Lead by Example
It’s a fact that most Americans are in debt. Sometimes it is not easy to avoid, especially once you have your own family. Set a good financial example by living within your means; if you can’t afford a new television don’t buy one. Your kids won’t care about shiny new toys and gadgets if they live in a happy, healthy home.
2. Make Kids Earn Their Money
Instead of handing over an allowance to your child every week, make them earn it little by little. Simple things like brushing their teeth, picking up their room, and doing their homework on time will get them a full allowance. If they want more money, offer chores to be done around the house like washing dishes or dusting cabinets. Kids will be more likely to appreciate their hard earned money.
3. Encourage Kids to Save
A savings account can help your child see a bigger picture, set goals, and plan for the future. If your kids aren’t too keen on saving their money, offer to put a small amount into their account each time they make a deposit. Don’t discourage your child from withdrawing money from their account or it may discourage their wanting to save altogether.
4. Don’t Let Your Children See You Stress About Money
The number one reason that most couples argue is financial troubles. It’s hard to live in a happy, peaceful household when you’re constantly worried about how the bills will get paid. As hard as it may be, put on a happy face for your kids. Worrying or stressing will only make the situation worse.
5. Set Financial Goals with Your Child
Does your child want something pricey like an Xbox or a new bike? To learn and appreciate how valuable big purchases like these are, sit down with your child and set a goal. Let’s say that your child’s allowance is $5 per week. If they save half of their allowance and put it in a savings account that pays interest, how long will it take to get what they want? If they are diligent with their saving, you could offer to match their savings to get to their goal quicker.
6. Teach Kids to Be Smart Shoppers
The grocery store might seem like a bore to many kids, but it can be a lesson waiting to be learned. Let’s say your child’s favorite snack is $2.50. A similar product of a different brand is on sale for 2/$3. Show your child the difference in what being flexible can buy you. Would they rather have one box of their favorite granola bars or two boxes of a similar kind for almost the same price? Luckily most super markets make it easy and do the math for you and post the price per ounce on the sale tag. You could even create a “treat fund” for your child and see how wisely they spend their money. Give them a $5 allowance to get whatever snacks or treats they wish and see how far they can stretch it.
7. Talk to Kids About Giving
It’s important to teach kids to appreciate the value of their money. While their allowance of $5 per week could buy them a bag of candy and a toy, a single dollar could feed a family in a starving country for a week. Check out charitynavigator.org where kids can choose a charity to donate to.
8. Teach Kids About Investing
Stocks and bonds can be purchased online with a small fee. Encourage your child to pick a stock of their choosing and buy a share. They can watch as the stock grows or falls and learn the power of investment. It’s also never too early to start a 401K and saving for retirement.
9. Communicate the Differences Between Needs, Wants, and Wishes
Allow your children to make their own spending decisions, but encourage them to think hard before they spend their money. If they want to spend their allowance on a toy, ask questions about the toy beforehand. Do they NEED this toy? How often will they play with it? What else could they buy with that money? Kids are quick to act on impulse so raising questions may just change their mind.
10. Involve Kids in Spending Decisions
Holding your child’s hand through every financial decision or simply making them for them will never teach kids to be financially independent. Kids have to learn from their spending choices whether they are good or bad. They must learn the discipline and rewards of good decisions and consequences of poor decisions.