10 Effective Ways to Teach Your Kids About Money
Kids form money habits as early as seven years old. If you make an effort to teach your children correctly, you can give them a big financial head start. Here are 10 ways to show them how it is done.
1. Teach them the concept of money. Start with coins. Teach them its value and encourage them to save coins in a piggy bank.
2. Lead by example. Take the time to explain what you are doing when you are using an ATM card, paying for groceries, or writing a check. Remember that the kids are watching your shopping habits, too. They will copy your behavior!
3. Get them a savings account. Introduce your kids to the concept of compound interest and show them how their money grows. Expand to a checking account as they grow more.
4. Teach budgeting with their allowance. Start with the basics. Show them how to budget and ration their money. Let them manage their allowance to improve their money skills.
5. Use games. Play encourages learning. Use board games, online games, and other homemade games to help them learn about money.
6. Expect that they will make mistakes. Your children can also learn from their bad decisions, so let them make these mistakes. It is a valuable teaching tool. Just step in accordingly and offer guidance when they need it.
7. Encourage entrepreneurial behavior. Let them earn money! Summer jobs, opening a lemonade stand, and working for their parents allow children to learn about business, hard work, and how money functions.
8. Explain credit. Teach the concept of delayed gratification. Help them understand the good and bad side of making purchases on credit.
9. Give an intro to taxes. The withholding tax on their first paycheck will not be a surprise if they already understand the concept behind it.
10. Teach charity. Children are naturally giving. Teach them the value of philanthropy early and explain the virtues of volunteering.
There are so many other things that you can teach your kids about money. These 10 things offer a great way to start. Make it a priority and help your kids get a big financial advantage.