If you are a parent, you may feel like your children thinks money grows on trees. In fact, according to ABC News, the regular use of debit cards, credit cards and ATM machines has made it much more difficult for children to understand you have limited financial resources. However, teaching your children about the value of money is essential to their future financial stability.
Step 1
Teach your child to handle money with an allowance. Encourage him to set aside a portion of his allowance every week for savings, says FamilyEducation.com, but also allow your child to make decisions about how to spend his money. Open a savings account for your child, once he is old enough, to allow him to begin learning the value of earning interest on his savings.
Have your child negotiate with you for raises or advances on his allowance, suggests CNNMoney. This will help him understand the significance of his additional income, and give him a head start negotiating salaries with future employers.
Step 2
Involve your child in family financial discussions and purchasing decisions. According to ABC News, finances are one of the least-discussed subjects between parents and children under 18, which only fuels their confusion about the value of money. Show your child your budget, so she can see how quickly the money gets spent on bills and necessities. Give your child an active role in deciding which luxury item or fun outing is affordable and which will need to wait.
Step 3
Take your child with you on shopping trips, such as trips to the grocery store, says FamilyEducation.com. Let him tally up the grocery bill with a calculator to observe how each item adds to the total, including those extra requests for snacks and ice cream.
Educate your child on how to shop for bargains. Have him look for sale items and compare unit prices with you, suggests FamilyEducation.com. This will give him hands-on experience understanding how those small individual savings add up to significant savings by the end of each shopping trip.
Tips and Warnings
- Charge interest on loans you make to your child, says FamilyEducation.com. Your child will learn how expensive interest can be, helping her make wise decisions about credit in the future.
