I remember watching my mom work overnight shifts and sell plasma so that we had enough money to pay rent. We never had a lot of money, but my mom found a way to make sure we were able to participate in sports and we always had food. One thing that helped my mom ensure we had enough money was a budget. I used to watch her balance a checkbook. I was fascinated with the lined paper and loved watching her fill the lines with numbers.
Now that I have a family of my own, I realize that sticking to a budget isn’t easy and there are a few things that would have been good to know before I had to do it on my own. If you want to ensure your kids have a good financial future, take time to teach them a few lessons about money while they are still little.
Here are five things to teach kids about money
Don’t rely on credit cards: We’re firmly anti-credit cards in our house. We had our own little run in with them and we’re still paying them off. It’s extremely frustrating watching money go out the window to pay for things we used or did a long time ago. Credit cards can be a helpful way to build credit, but most people don’t have the self-control to responsibly use them. I realized we needed to teach our kids this lesson after I told my daughter we didn’t have cash to pay for something and she told me to “just put it on the credit card.” Yikes.
Pay yourself: The easiest way to avoid using credit cards is to get into the habit of paying yourself first. If you have a savings account, you don’t have to rely on credit cards or loans to help you out of a sticky situation. Teach your kids this by having them set aside a portion of their allowance or gift money into a savings account. Help them stay excited by keeping track of how much they’ve saved over time.
Teach them to budget: Teaching your kids that a budget isn’t something to be feared will go a long way to ensuring a healthy financial future for them. Kids should learn early that if they want to buy something they need to be able to afford it. Have a financial evening where you give them Monopoly money and have them “pay the bills” with the cash. Don’t be afraid to let your little ones see you manage your money.
How you spend your money is a choice: As a parent you’ve probably witnessed the gimme-gimme stage. One way to nip this habit is to teach them that how you spend your money is a choice. You, and eventually they, choose where money goes. Instead of telling your kids you “can’t afford it,” tell them you are choosing to spend your money elsewhere. Let your kids know that they will have to make choices about how their money is used and if they make the right choices they’ll have enough to do some fun things too.
Resources:
http://www.forbes.com/sites/laurashin/2013/10/15/the-5-most-important-money-lessons-to-teach-your-kids/
http://www.themint.org/
http://www.wsj.com/articles/the-smart-way-to-teach-children-about-money-1422849602
