While most of us will agree that financially responsible children are likely to become financially responsible adults, when it comes to teaching children about money, many parents are not sure where or when to begin.
CredAbility, a consumer counseling agency based in Atlanta, offers these tips:
- Set an example—The first step in raising financially responsible children is to assess your own money management skills. Do you have a spending plan and do you know where your money goes each month? Making changes in your own spending and savings behavior will not only help you as you talk to your children about money, but will improve your financial outlook as well.
- Start early—Elementary school might be the right time to open your child’s first savings account. Some schools offer banking programs where a local bank works with the school and kids can open their own bank accounts. Once their account is established, they can make deposits at school or at a local branch office.
- Set goals—As adults, it’s sometimes tough to distinguish between wants and needs, so imagine how difficult it must be for a nine-year old who is convinced he needs the latest video game. Talk to your kids about what you want versus need, and how you plan to save up for that purchase. Your commitment will speak volumes to your children.
- Allowance—Allowance can be a great way to help children learn how to handle money. To encourage savings, you might provide two payments—one for saving and one for spending, so it is easy for your child to know the difference.
- Let them make mistakes—You may be tempted to stop kids from spending money in a way you might think is foolish or wasteful. Resist the temptation. Some of the best lessons your children learn will be from making mistakes. And lessons learned now will stick with them for a lifetime.