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11 Personal Finance Tips To Teach Your Kids
Posted By Kristen Curzytek On September 29, 2011 @ 6:16 pm In Family Focus,Saving,Smart Shopper | 2 Comments
Teaching your child about budgeting and personal finance can seem like a challenge. When is the right age to talk to them about the importance of saving? It’s actually never too early to start teaching your child about making smart choices with money. Below are some tips to help introduce the subject and develop good habits.
Start them on an allowance
An allowance is a great way to teach your child the value of a dollar and teach them responsibility. Giving them chores to do around the house and paying them for a job well done will give them reason to contribute. Make sure to give them their allowance only when they do the household tasks, not simply because you promised to pay them.
Let them know the options they have to make money
Chores are a great way to teach your child about working for money and being responsible, but there are many other things they can do to earn a buck. Encourage them to do other things, like shoveling snow for neighbors, selling lemonade, baby-sitting, being a dog walker or getting a paper route. There are plenty of creative ways to make earning fun.
Teach savings early
The next big step after giving them an allowance is encouraging your child to save a portion of it. Have them put some of their savings in a clear jar for a long-term goal like a college fund, so they can see their funds grow. It can also be a math lesson; they can keep track of how much money is in their savings jar.
Play games that involve money
Monopoly is not only a game, but also a good tool to teach your child the important lessons of money and how to budget for things. If your child is too young for a game like Monopoly, sit down with them and teach them how to make change. Start with a dollar and work up to $100 and you’ll see their math skills improve as well.
Explain costs of everyday items
Spend some time with your child and explain how everything costs money – electricity, cable, food, toys and more, to make them aware of their value and to not be wasteful. Explaining how hard you work to pay for things around the house can help them understand that it takes hard work to have the necessities and luxuries of life.
Teach them to be charitable
Now that you’ve explained the principles of saving money, it is time to share the importance of giving to others less fortunate. Let them know it is imperative to donate to others, both with money and time. There are small things they can do in their community that can help in a big way, like volunteering at a soup kitchen or helping to plant trees in a neighborhood. It starts with you, so don’t forget to be a good example!
Teach them how to do banking
When your child is about 8 to 10 years old, show them the process of banking. While most banking tasks can be done online or at an ATM, it is still important to explain how to fill out a deposit and withdrawal form. This is a good time to explain how a check works and the proper way to fill one out. Let them fill out the check registry and explain how important it is to keep a record of things coming in and out of the account. You can explain how interest works, how it is calculated and when it is deposited to the account. Many adults find banking to be complicated; explaining how the process works can make them more comfortable with banking procedures when the time comes.
Take your child grocery shopping
Grocery shopping is another everyday opportunity to teach your little financial guru to compare prices and look for deals. You can show them how to comparison shop between brands and prices. A trip to the grocery store wouldn’t be complete without introducing them to coupons and how much money they can save with them.
Keep money safe and keep track of it
Everyone can remember a time in their life when they lost money or misplaced money. It is an awful feeling but is a good lesson to learn. Remind them to keep their money in a safe place and know the amount they have with them at all times. If they lose money, don’t replace it, let them know about the value of being responsible at an early age.
Explain your financial habits
If you tend to pay with a debit card for a lot of your purchases, describe how it works. Where does that money come from? Like you did with the check-writing lesson, review the importance of keeping track of debit card purchases so the account isn’t over drafted, and explain the penalty of overdraft fees. If you are paying with a credit card, explain how interest figures into the monthly payment. Teaching them now about credit card debt can help them better understand it and avoid being another statistic.
Explain the importance of retirement savings
Now that you’ve explained interest to your young adult and they have gained more knowledge from you and math classes in school, talk about the importance of starting a savings account for retirement. This is something to teach your child while they are in high school and maybe starting their first job. If their job offers a 401(k), explain that contributing to the fullest extent is beneficial to their future.
Hopefully these suggestions can help you introduce your child to finance, help them understand the importance of money and the responsibility they have to protect it. Keep going over these money tips as often as possible with them while they are growing up. By the time they are adults they will have the skills to be a financially wise adult.
Kristen Curzytek writes for Quicken Loans and loves that it’s one of the most amazing places to work. Check out the Quicken Loans YouTube page and learn more about what it’s like to work at QL.
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