Credit cards and expenses
Many children watch their parents live on credit cards. When there’s something new that they want, or an upcoming obligation, they see their parents reach for the card and take care of it, almost like it’s magic. Relying on credit cards does little to truly teach children about managing money or being financially responsible adults. Here are some tips on finding ways to teach kids about money.
Teaching the value of money
Schools teach reading, writing and math, but rarely do they cover everyday tasks such as paying bills, understanding budgets, or working with interest. It is the parents’ responsibility to educate their children in this area. Here are some steps for you if youre trying to teach your child about money:
- Start teaching children early about money. Gone are the days of letting a child live completely oblivious to finances. In todays tough times, children need to know that money has to be managed. Some ways to accomplish this include teaching kids about how to save up their cash. Let them see their dollars accumulating in a box or drawer. When its full enough let them take it to their bank account and deposit it. Visual learning is a great way to get a message across. If they see money accumulate, they get an idea of how it works later on.
- Teach children where money comes from and the correlation between work and pay. Children are naturally led to think that money “comes from Mommy and Daddy. When mom and dad are out of cash, normally credit cards take care of purchases. Every child should be taught the basic concept of how working brings in money. And then how money is used for purchases. And then how we use things and repeat the cycle. Paying children for tasks that are above the ordinary, like cleaning out the attic or the garage, can help them to see value in labor.
- Consider offering your children an allowance. Experts debate the effectiveness of allowances and whether or not children should be paid to do everyday chores. One way to handle this is to pay children for large tasks that aid the family, but do not pay them for their responsibilities. Responsibilities or daily/weekly chores could include keeping their rooms clean, sweeping, mopping, cleaning up toys and assisting with laundry. Conversely, a family having a garage sale can pay their child for keeping things lined up and organized neatly for sale.
- Make the savings plan interesting. Depending on your childs age, help them to engage in saving money. For a younger child it could mean decorating a piggy bank. An older child it might help them to save for a bike or other large item.
The importance of finances
With the recession hitting hard, its more important than ever to understand how finances work. Children need instruction from parents on the acquisition, saving, budgeting of money, and how credit cards and loans work, and how to manage it all. For the sake of the security of their future, they need to be presented with information they can understand and learn from. Working to educate children today helps create financially responsible citizens of tomorrow.