Teaching your children about money ensures that your children grow up with sound financial knowledge and good financial habits. This can help ensure that your children don’t grow up to become dependant on credit cards, unsecured loans, and payday loans as adults. Good financial health is important and teaching your children good financial habits now sets them up for good financial health down the line.
As soon as your children are old enough, buy them a piggy bank. Show your children the pleasures of saving to ensure that they become savers for life. Contact your bank to find out what type of children’s savings banks are available and sign your child up for a bank account as soon as possible. Having your child save a small amount each month can add up by the time they reach college age. As well, speak to your bank about children’s education programs. Many banks have booklets and even school programs for children to teach children about money. Find out if a local bank or financial company visits schools in your area.
In addition to encouraging saving, it’s important to teach your children about spending wisely. Teach your children about budgeting by helping them make a list of their needs and wants. Explain the difference between needs and wants and how to prioritize spending. For example, food and shelter are needs while toys and video games are wants. Encourage your children to save up for their wants rather than using credit cards or loans.
Teaching your children about earning money is also important. Encourage them to find ways to earn money such as doing chores around the house or selling items they no longer need. Teach them about the value of hard work and the satisfaction of earning their own money.
It’s also important to teach your children about debt and interest. Explain to them that borrowing money comes with a cost and that they will have to pay back more than they borrowed due to interest. Teach them to be responsible borrowers and to avoid high-interest loans like payday loans.
Finally, lead by example. Children often learn best by watching and imitating their parents. Set a good example by being a responsible spender and saver. Involve your children in your own financial decisions and explain the reasoning behind them.
Teaching your children about money is an ongoing process. As your children grow older, they will encounter new financial challenges such as managing credit cards and paying off student loans. By starting early and providing a solid foundation, you can help ensure that your children have the knowledge and skills they need to make good financial decisions throughout their lives.