Life is full of teachable moments especially when it comes to children and money. April 22 is Teach Your Child to Save Day, a special day to encourage your children to develop good financial habits early.
Teaching children about money need not be a daunting task. Try to use cash when you shop with them. Let them see the money and have them use cash to buy their own purchases. When they spend their own money, have them count back the change. Discuss that the bank is where you keep the money until you take it out of the ATM.
Pay them in cash for their allowance and talk about having the bank (piggy or otherwise) take care of the money they are not spending. Encourage them to save, perhaps using the ATM or going into the bank to put money into their own account. This is how they learn to budget their own money – when they hear you talk about monthly savings towards a goal, they too can do that.
Discuss the cost of items they want with them. The cost of a game for the Xbox or monthly internet fees should be something they are aware of especially as tweens. It is important for children to know how you make your money and the sacrifices you might be making to get them what they want, all without making them feel bad or guilty. If they want something outside of their budget, a parental loan may be suitable along with a
Planning and taking a vacation provides lots of fodder for teaching children about money. It is great to have the trip to Tahiti to play in the sun or the drive to camp at a National Park during summer. If your vacation decisions are based on cost, share that concern with the children to the best of their understanding or how fortunate you are to be able to take the vacation of their dreams. You want to avoid having them worry about money – that is the job of the adult.
Do you remember your first paycheck? That knowledge that you can make your own money using your abilities? It is important that your children also learn that amazing feeling. Yes, it might be minimum wage, but it is theirs and everyone starts somewhere. Share with your children how you started on the working ladder and have their grandparents also tell their story. It helps children to know that it takes time, knowledge and expertise to reach financial well-being.
As you wave your children off to college, they may have taken out a loan to get there. Now they feel rich. And now is the time to discuss loan payments and using the loan for the school expenses it is designed for. Adult children often stay on the parental payroll through cell phone plans, and health and car insurance plans. Often, they are not aware of those costs. Without making them feel guilty, it helps for them to understand the costs of standing on their own and being an adult. You had to learn, and your lessons will help them.