When and what to teach your child about money can be a difficult balance. Every child develops and reaches different stages and abilities at different time. As a parent, only you will know when the right time is to teach your child about money.
Children often earn money through an allowance. When your child is old enough to do household chores, it might be a good time to begin teaching about money. Children taught to value money and respect money, may have fewer financial issues in the future.
If you just give your child money without asking them to work for it, you’ll run the risk of your child not respecting money or using it wisely. That will set your child up for possible financial problems in the future.
When it’s time to teach your child about money, there are some things you should cover.
Children should know where their money goes. When you give them an allowance, they should know where it’s spent. You can do this by making them write down where they spend things, like tracking. Another way you can teach them is by getting and keeping a receipt.
Children should know that it’s good to spend less then they earn. Children have a way of spending every penny they are given. It’s a good idea to teach them to spend less then they have when they are young. This will get them in the habit of saving money.
Children should know how to save. You may take your child to the bank and open a savings account with them. They can watch the bank receipts as they put money in. Another thing you can do is put their savings into an envelope or jar, so they can see they have money.
Children should know that debt is good and bad. While there are good debt like a up to date loan, there is bad debt like an over due bill. This is an advanced lesson for small children but one that should be taught to teenagers before they are thinking of buying a car or applying for their first credit card.
Children should know to shop around. If they have a favorite toy or CD they really want, use that time to teach them about sales ads and comparing prices from store to store.
Children should know what investing is and how to invest. A good way to do this is allow them to save a while, then invest in a CD or other things. These can be done short term to get your child in the loop of things before moving on to bigger things like the stock market.
Children should know to have big financial dreams as well as small ones. For children a big dream might be saving up for that first car, while a small dream could be a new CD. Teach your child about dreams and financial goals.
Teaching your child about money can be a lot of trial and error, just don’t give up. Money is a big part of their lives and their futures, it’s worth the extra time to get it right.