Teaching Kids about money from an early age can set them up to learn good money habits when they become adults.
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Teaching Kids About Money
Raising Kids today and Teaching them the Value of Money is more important than ever. We can't expect our children to learn about money habits at school, it has to be taught at home. Even letting your kids be involved in family money conversation will take the stigma off of money being a taboo subject.
Many parents teach kids how to use Save - Spend - Give Jars and you can easily make them with your children with 3 jars including lids and using a chalkboard sticker or something similar to write the names on them.
Teaching Kids and Teens Good Money Habits
Then they can learn to save 10% for later, Give 10% to a charity and then they have the rest to spend on what they choose, providing you agree with their choices.
This technique is the basis for teaching money management for kids, teens, and adults.
Once your children learn this money habit they will be set up for their future. That is, as long as they practice it.
It sounds easier than it is. Teaching your kids about money is something that needs to be done as early as possible and an ongoing process.
Once kids know that they need to wait before they purchase and they need to have patience they will begin to understand the value of money.
Learning these good practices when kids are young will instill in them smart money habits as they grow. They will want their own toys, cars, expensive clothing, money to travel with and eventually a house and money to raise their future children.
The great thing is we can have all of “THE THINGS” if they use the 3 principles of saving, spending, and giving. You can choose your own percentages, but the minimum you should be sharing with your children is the 10/10/80 rule.
Many adults live on less than 50% of their income. The rest is saved for retirement and charity. You don’t have to have a big income either. This principle will work on whatever your income is, as long as you learn to start managing your money when you are young.
Now you are probably wondering how do I teach them those lessons on why they should Save, Spend, and Give.
Those lessons will be taught inspired by your culture and beliefs as parents. Here is the most simple breakdown I can give.
Teaching Kids to Save Money
SAVE: Coming up with percentage as early as possible with your kids will get them set on the right plan. It teaches them responsibility. They should be taught that life has ups and downs and saving money will prepare them for when those times come.
When they are young it might be to save up for their favorite toy, or even a special activity they want to participate in. It is based on age-appropriate options. You are showing them the importance of thinking through a situation. It eventually will make them appreciate the item they just saved for more than impulse spending.
As a teen, it might be for that cool pair of new sneakers or even their first car. Maybe you are going to match what they save to add for a car.
This is a great motivator for them to create a savings plan.
Teaching Kids to Give to Charity
GIVE: Teaching kids that there are other people that are in need is a great value to instill in them. We are not here on this earth to just satisfy our needs. We are to help others if we can.
As a young child, you can share by giving in the offering at church, or using the money to make cookies for a shut-in neighbor, donate their older toys that are in good shape to a charity, the ideas are endless, there is such a great need in our country.
Another great idea might be when having your child’s birthday is to come up with a theme they can donate to later and ask for certain types of unwrapped gifts, such as books, personal care items, blankets for pets, items for a women's’ shelter.
Then the child can donate to them at a later time. You can still give your child a gift for their birthday but your child will have a part in creating better lives for others, while still having fun.
For teens, it might be to purchase some cans for a food drive, help at a pet shelter, walking your neighbors' dogs, again teaching your child to think of others and sharing simple ways creates an empathetic child who grows into a generous adult.
Teaching Kids Good Spending Habits
SPENDING: This part doesn’t need much explanation other than to have them think about what they are spending money on. Is it going to benefit them? Or is it frivolous spending.
There is nothing wrong with spending your money on things that aren’t necessary. However, a good suggestion would be to think about what you are spending on and will that take away from something you might need later.
How Kids Can Earn Money
ALLOWANCE AND GIFTS: There are a lot of different views on giving kids an allowance for chores and what is expected to be done around the house without any compensation. The point here is you are teaching them how to manage their money from a young age.
You can choose to call it allowance or any name you want. You can have some chores or jobs be part of their daily things to do and then other jobs will be compensated. Don’t get hung up on titles, but remember we are raising our kids to be responsible individuals. Age-appropriate chores and jobs that they grow with can teach them good habits and skills.
TEENS AND JOBS: Depending on your view of teens working or not, make sure they are using the same principles as above. You might suggest they save more than 10% and open a higher paying CD account to save their money.
Opening a Bank Account for Kids
Teens can open a custodial savings account with their parents. They are usually free accounts as long as they are minors or in some cases in college full time. Spend time looking into brick and mortar banks vs. online banks for the best rates of return. To read more of my budgeting articles find them at A Day in Candiland