When I was little, I wasn’t a kid who got an allowance. Sure, I did chores around the house, and my parents gave me money for the things I wanted to do. I saved up the money I got from holidays and birthdays in a piggy bank, but I didn’t really start developing any financial intelligence until I opened my first bank account. At age twelve, my first account was really simple. It was a savings account at a local credit union, and carefully monitoring my small account as it increased due to microscopic interest payments and sporadic deposits was thrilling. When I wanted to buy my first car, I needed a more grown-up account. In addition to my simple savings account, I added a checking account and got my first debit card and checks.
Finances aren’t usually taught in schools. The responsibility for creating financially savvy children is up to the parents or guardians. Here are a few tips to help you teach your child about finances.
Work For It
Money doesn’t grow on trees, and getting money from relatives for special occasions can’t be a reliable source of income. Rather than just supplying your child with money when they want or need it, set up an allowance system that will let them to work for their money. The allowance system can be set up however you want. If each chore is given a dollar amount, or a weekly payout is based on overall performance, your child will still be learning about the value of money. Working for money changes how you view money. Rather than blithely spending $150 on a new skateboard, your child may reconsider and buy new wheels for the old skateboard.
Make It Official
Piggy banks are an iconic display of children’s finances across the United States, but try making it a little more professional by helping your child open a savings account at a local bank. Help your child monitor the account and talk about goals he or she may have for the money.
Budget It Out
If your child loves to spend money, help him or her create a budget. While you may not be able to make him or her stick to it all the time, you can at least instill the importance of money planning early on. Make sure the budget includes regular deposits into the bank account!
What are some other ways you’ve found to help children understand the responsibility of finances?