One of the most important things you can do for your children is to teach them about money, what it is and how to manage it. It may seem that this is something they don’t need to know very much about until they are older teens with access to their own money but the fact is, the sooner you start to broach the subject with them, the more financially fluent they will be when the time comes for them to have their own money instead of relying on you to provide everything for them.
With that in mind, here are some of the best ways to teach your kids about money:
1. Get them a savings jar
A very basic way to teach young children about the benefits of saving is to simply get yourself a clear savings jar and encourage them to put any money they get for doing their choirs or whatever into it. They’ll love seeing the pot of money grow and when they have enough to buy that favorite toy, it will become very clear to them what the benefits of saving are.
2. Be a good example for them
They may be too young right now to really know what credit cards are, how to compare credit card deals or why paying cash is the smarter option, but if they see you, their parent, doing those things and making smart decisions as often as possible, those good habits will seep into them on a subconscious level and they’ll be more likely to manage their money sensibly in the future too.
3. Teach them opportunity cost
If you make it clear to them that buying X video game costs X amount of money which means they won’t be able to afford that new pair of sneakers they want too, they will come to understand the value of money, why it needs to be budgeted and how to make smart decisions about how it’s spent. Yes, they are likely to make poor decisions from time to time, but if you allow them to do that and then talk it through with them, it will be a great lesson for them to learn.
4. Make them earn it
Ione of the best ways to teach your children the value of money when they are old enough is to make them earn their allowance instead of simply letting them have it for “free.” If they know that they have to clean their bedroom to earn a couple of dollars and pull the weeds to earn a couple more, they will get to understand that money has to be earned and the harder you work the more money you are likely to see in your life. They will also be less likely to waste it when they know how much hard work goes into acquiring it in the first place.
As you can see, there it’s not too hard to teach your kids about money in a way they understand but which will also help them in the future.
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