How To Help Your Kids Understand Money
Oh, money. It’s one of the least fun topics in the world and yet it’s something that we all need to come to terms with at some point in our lives. Are you any good with money? Chances are, no matter what your views are towards your finances, you learned them from your parents. That might be a good or bad thing, but you probably already know that your parents’ behavior shapes the way that you look at the world now. Here are some ways that you can teach your kids how to be financially healthy and how to understand money as they grow up…
Model Smart Financial Behavior
As a parent, you probably figured out that kids learn most of their behavior from you that time you let a curse word rip when you stubbed your toe, and then your toddler decided to humiliate you by repeating it in public every chance that they got. Your kids are like little sponges – they observe you and learn from you, and they will end up mimicking your behavior, so it’s important that they watch you making smart financial decisions. If they see you blowing your money every chance that you get, they’ll grow up thinking that it’s okay to spend cash that they don’t have. Likewise, it’s a good idea to use cash instead of credit cards around your kids whenever you can. Cash seems more tangible – and it’s been proven that a lot of adults find it hard to make a connection between their credit card and reality. We all know that using cards sometimes doesn’t feel like using ‘real’ money – don’t let your kids grow up feeling the same way.
Teach Them To Budget
It’s important that your kids learn to budget as early as possible. Get them to make lists of their incomings (their pocket money from you, plus any extras that generous grandparents might give them, plus birthday and Christmas money at certain times of the year) so that they can see exactly how much they have to spend each week or month. If you’re going out with them to let them spend some money in the toy store or book store, then don’t help them out if they’re running short – it may be difficult to watch them have to put back that Barbie sticker book or that package of erasers shaped like dinosaurs, but the truth is that they need to learn that they can’t afford everything so they should try to prioritize what they need or want the most. Your kids need to learn that money is finite – they won’t always be supplemented by you reaching into your pocket, so they need to try to use their money for what they want themselves.
Show Them That Solutions Can Be Found
It’s important to demonstrate to your kids that even if you’re in a difficult financial situation, nothing is forever, and there are solutions that can be found to financial problems. If your family is having money problems, then explain them to your kids in simple language – maybe the car broke down so you’re having to dip into your savings, or your partner’s hours have been cut back at work. Make sure that your kids understand that if you’re having financial problems, it’s better to do something about it than stick your head in the sand and hope that everything will magically turn out to be just fine. Go to talk to your bank manager or an accountant and be completely open and transparent about your money problems. If you get a short term loan from a site like Personal Money Store, that’s great – just make sure that you pay it back in plenty of time and that you don’t let the interest stack up. Make sure your kids know that loans are generally a short term solution to a problem and that they shouldn’t get in over their heads and ruin their credit scores.
Open Bank Accounts For Them
It’s important to make sure that your kids have bank accounts from an early age. You might choose to have another separate account where you save for your kids’ futures and that’s great – but it’s just as important for your kids to watch their own bank accounts grow as they deposit money in there. Make sure that they save ten percent of all the money they receive for birthdays and Christmases – this will be the start of a culture of saving money that they’ll keep with them for the rest of their lives. Get them to come along to the bank with you, so that they can make their own decisions about what accounts they want. Some of them will have different benefits – and it’s important for your kids to start making their own financial decisions as early as they can.
Close The Bank Of Mom And Dad
Make sure that your kids know that the bank of Mom and Dad is closed for business the vast majority of the time. Ideally, you want your children to strike out on their own to discover the world – you don’t want them to think of you as a back up the whole time and to be totally okay with taking stupid risks because they know they can always come to you for money. Of course, if they’re having problems then it’s always kindest to bail them out, but if they don’t have enough money for luxuries because they blew it all on a crazy night out, then you don’t have to loan them money. Teaching your kids about independence means that you have to cut them off to some extent. No one’s saying that you shouldn’t pay for their education or help them out when they’re in trouble, but if they rely too strongly on you for financial support then it will be very difficult for them to learn to figure out their finances themselves and stand on their own two feet. Make sure that they know they can rely on you for the big things, but for the little luxuries in life, they’re on their own. If you want to treat or reward them, go for a movie or a hangout day rather than handing over a pile of cash.