How do I teach my child about money?
Money does not grow on trees; our parents have told us countless times. These days, we are the ones quoting this old adage to our children. It’s our go-to phrase whenever we pass by the toy store of why we can’t buy the action figure of the latest superhero franchise.
Rather than always resolving such moments with a sermon, why not teach our children about money? It is never too early to teach our kids about money and we don’t have to wait until they are "ready” before we teach them the value of money. On the contrary, it is highly beneficial to develop healthy financial habits and outlook at a young age. The key is teaching concepts appropriate to their age.
Age-appropriate money talk
Once your child can understand basic concepts of math, around 5 years old, you can begin to teach him how to save. They may not have an allowance just yet, but you may opt to give them some in order to teach him how to save.
Give them a piggy bank they can constantly see at home, so they can be excited to fill it with money. Even children as young as 5 years old can begin saving in a piggy bank!
If your children are in the early years of gradeschool, around 6 to 9 years old, The Guardian reports that you may already teach them how to budget their allowance. Help them understand how to be wise with money by teaching simple budgeting. Give them a few categories he can easily remember for example: savings, spending in school, gifts, gaming (for the arcade), and charity. You can teach them to set aside an amount for savings before spending the allowance.
Older children can also learn simple ways of earning. Financial expert and author Dave Ramsey says you can teach your child how to “work” for money, by rewarding simple chores they can do at home to help out
The value of saving
Another healthy habit you can start early on in children is to utilize a savings account. Accompany your child to the bank to open his first savings account. They can deposit the money in their piggy banks periodically (for example, monthly). Help them to understand the passbook so they can feel the accomplishment of growing their savings account. You can give your child additional motivation by promising to “match” their savings at the end of a certain time frame like three or six months.
Discuss with your child what they are saving their money for. Be open to their thoughts like if they want to spend it to buy something, but also try to remind them of the idea of budgeting. They may wish to spend or give only a portion, so they can continue to save. This way, you can teach them about money and finances through a lifelong process and not just a singular moment.
Start them young
It is never too early to teach our children about money and to encourage them to have a healthy view of money. Much like most of what we teach our children, financial values should be taught as a process and depending on their age and ability to understand. If we teach our children to save and budget while they are young, the better their chances of being financially responsible adults.
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