You make a wise choice deciding on teaching kids money management skills. Money management skills are vital in our modern society. How your children use and manage money as they grow up will directly influence how well they live in the future. Many adults today dealing with debt problems of huge credit card balances and the likes were not taught to manage personal finances properly. If only their parents knew that by teaching kids money management skills in a fun and positive way will aid them to foster a healthy relationship with money, they would not have been in such a plight.
While many schools have a financial literacy curriculum these days, getting your children to learn basic money skills is never too early. Financial education is too important to be left solely to the school. As a parent, you can adopt these 3 easy steps to teach your kids how to manage money and give them a head start.
Step 1. Discuss money matters openly with your kids.
Openly talk about money at home is one effective way to teach kids about money. Young children often know more about money than we assume. They learn from an early age that the burgers from McDonalds or the video games from Toys-R-Us all require money to purchase. On the other hand, they do not fully comprehend the way the whole financial system works. If you do not talk about money issues with your kids, you lose the chance to impart to them such proper money lessons as earning, saving, spending, and investing.
Step 2. Get your kids involve in family finances.
Money discussion alone can only impress upon your kids theories and concepts. They need real life examples to better grasp some money management skills. Once your kids feel comfortable talking about money matters with you, you can engage them in the daily management activities of family
Take them together to the bank to deposit your paychecks into savings accounts. Let them help in check writing to see how you disperse the funds to cover household bills. Get them to do the math when balancing a checkbook. Ask them to sit in on financial planning and household budgeting and so on.
Step 3. Let your kids manage their own budgets.
Your children may learn a lot from watching you doing the work, but nothing beats first hand real life experience in teaching kids money management skills. When you feel they are ready, let the kids manage their own budgets. They will become money savvy quicker learning from their own mistakes.
What you want to do here is to set aside money for your kids as weekly allowance, then give them the freedom to spend it as they see fit. However, you should make it clear to them they are responsible to provide some of their own needs like clothing from now on. So whenever they want a new pair of pants or socks, they have to pay for those with their allowance. When the children are in their teens, you could also consider asking them to earn their pocket money by taking care of household chores or taking up summer jobs.