If you are a parent, you may be wondering about when is the best time to teach your kids about money, as well as, what are the best strategies. The fact is the even young pre-schoolers can start to understand the basic of money and savings if taught at their level. In fact, the sooner you begin teaching your children about the important of money management, the better able they will be at handling their finances once they become adults. Below is a look at several aspects of money management that even the youngest member of the family can start to learn.
If at all possible, it is a good idea to start an allowance program with your children for completing certain chores around the house. Not only will this help your child understand that you have to work to earn money, but it will provide the opportunity to teach them various money management skills. If your children are old enough to have their own job, you still have time to teach them money basic and help them learn how to management the money they are earning.
One of the most important things you want to do is to encourage your children to start setting some short and long-term goals for what they want to do with their money. These goals will depend greatly on the ages of your children. Young pre-schoolers are likely to only going to want a smaller item, or perhaps just saving this money will be enough for them. Grade school children are more likely to understand the concept of setting goals and saving up for something they really want.
It is especially important to teach your teenagers about setting both long and short-term goals. You can show them how to save money back each week or pay cheque until they reach their goal. You may also want to encourage them to save for longer-term goals, such as their education or a car.
Your children are likely to be more interested in spending money than they are about saving money. However, it is vital that you teach your children even from a very young age the importance of saving money. Consider opening up a separate savings account with your child at the bank, so he/she has a place to secure their savings. Most financial experts agree that you should try to save ten per cent of your earners, if possible. Since your children do not have many, if any, bills to pay, they should have no problem setting at least ten percent aside for savings.
Keep in mind that this special savings account is not for saving up for one of the short-term goals, but is rather for their future. Perhaps they could use it for their education or to purchase a car, when the time comes. You should even encourage them to set aside any special money they receive for holidays, such as their birthday or Christmas. If this savings practice is instilled in your child at a young age, he/she is more likely to stick with this practice as they enter into adulthood.
No good money management plan would be complete without keeping a budget. Naturally, your child is not going to have a very extensive budget, but they should still be taught the basic skills of tracking where their money is being spent. Encourage your children determine where their money will go each week and how they will spend it. This can be done even if your child only receives a $1 a week allowance. He/she can learn to put a certain percentage of their earning into their savings, towards their goals, perhaps donating a certain portion, and leaving the rest to spend.
These money management tips are a good place to start when it comes to teaching your children about money. These practice will led your children to making money management decisions, such as how to divide their money, what to spend it towards, and what goals are really important to them. You should advice your child about how to spend their money, but you cannot force them. However, you cannot bail them out if they make poor decisions, unless absolutely necessary. This will teach them lessons about money that are easier to learn at a young age then once they become adults.
What types of games or tips have you used to teach your kids about personal finance?
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