Teaching Children to Manage Money

Wednesday, October 29, 2014

As a parent, one of most important lessons you can teach to your children is solid money management. If instilled in children at a young age, these habits will stick with them throughout their lives.  Here are some ideas to get you started:

The sooner, the better… Children are like sponges; they absorb information with very little effort. You can teach your kids the basics of financial management as early as 5 years of age.

Delay gratification… One of the most fundamental concepts of money management is the fact that it is a finite resource.  Parents want to be able to give their children every advantage, but the practice sets kids up to fail when they become the masters of their own money.  Teach them that just because they want something, it doesn’t mean they need it.

 

Save some for a rainy day… Introduce the concept of saving up for something big (like a trip or a car) when your children hit their teenaged years. This is when they are likely to have their first jobs and start developing permanent spending habits.

Work for it… Teach them the correlation between effort and remuneration.  Encourage your children to work beyond regular chores, to earn extra money.   

Encourage financial participation… Include children in daily budgeting decisions. Depending on their age, you can involve them in everything from grocery buying to deciding whether family vacations are a good value.

Do what I do… Too often, parents adopt the ‘do as I say, not as I do’ model of money management.  The reality is kids emulate adults.  Be a good example, and be prepared to defend your own money decisions.

Set your kids up for long-term financial success by teaching them solid financial values now.  It will be one of the most important things you can do for their future.

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