Teaching kids to correctly manage their money, is one of the biggest challenges that parents will face today. If your child can learn the difference between wants and needs, how to save, and follow a budget, they will be ahead of the game. It’s very important to begin teaching your kid finance at a young age. They will have a stronger foundation by learning to work for the things they want, instead of just asking for them.
Instant gratification is a road you’ll want to keep your kid from going down. One way it starts, is by your child continuously getting things handed to them, without having to put in the necessary work to earn them. When your child comes to you and says they want that new skateboard, or computer, ask them what creative ways they can come up with to earn it.
Games to Teach Finance
It’s been proven that the more fun that learning is for kids, the better they’ll retain the lesson. A great way to teach kids about finance and money management is board games, such as Monopoly, Life, and Pay Day. These games are ideal for teaching them about money – how to earn it, spend it, and what things are worth. Have a game night once a week, and encourage your children to learn while having fun at the same time.
Make them Earn It
It’s a great lesson to allow your kid to earn an allowance, weekly or monthly, by giving them chores or housework to do. This will help to give your child a good foundation, and prepare them for their first job. When they are a little older they might earn money from pet sitting or mowing lawns, until they are old enough to get a real job. Working is a great way for kids to begin to build confidence and self-esteem.
Exploring Credit
You need to take the time to communicate to your child they way the world of credit works. Be specific about who will be paying for the bill – them. Also, make sure they are aware which fees are associated with the card, and what interest is and the way it works. They will need to learn to maintain a budget sheet and track their expenses carefully. Make certain they know that there are consequences for not paying the bill monthly.
Once you’ve explained to them how credit cards work, come up with a low spending limit to begin with. Encourage them to stay at a low spending limit – even if the card company raises their limit they should request it be lowered. You should make sure they understand the difference between their wants and needs. It’s vital that they know having a credit card isn’t an excuse to buy things.
Remember it’s best to begin introducing the world of finance to your kids while they are young. The last thing you want for your child is for them to end up in debt. You can help to decrease the chances of that happening by teaching them all you can about financial responsibility.
Author Jessica Stevens is a financial consultant and content contributor for wisebread.com, a site offering detailed information and reviews about balance transfer credit cards and great money tips for living large on a small budget.