5 Financial Tips On Teaching Your Child About Money
Growing up in a day and age of plastic credit cards can make the concept of money even harder to grasp for a child in today’s world. Teaching your child about money at a young age can have a long lasting, positive effect. Providing your child with the right tools will help them make the most of what they have later in life. Here are five financial tips to help you teach your child about money: Start young and change the conversation as they get older Often children think money is an unlimited resource because it appears out of nowhere. If your four-year-old is always with you when you take money out at the bank, this is the perfect time to bring up where your money is coming from. As your child gets older, continue to expand on the concept of money. Give an allowance Whether you give your child a lot or a little, giving an allowance is a great way to teach them about finances. A weekly allowance turns the concept of money into a tangible thing. Each week when you give your child their allowance, count the money with them. Having an allowance gives your child a sense of ownership which gives a new meaning to spending money. Create a budget with your child. Now that your child has an allowance, it’s important to help them budget their money. Talk with your child about splitting their funds into a savings and a spending piggy bank. In the future, when they receive money for a birthday or holiday, they will automatically think of putting some of it into their savings. The money saved should be used for emergencies or items that your child needs. The money for spending should be used for extras such as gifts or entertainment. Many times people think that being financially savvy means not spending on extras, however, that is not true. Setting funds aside for entertainment and sticking to the budget, can help financially in the long run. Let them spend their money as they please Now that your child has some cash to spend, they may get excited about everything they can buy. Although, you may be tempted to stop your child from buying something you know they will never use, it is important to let them learn from their mistakes. When your child does not have enough to buy something they really want because they spent all their money on something they didn’t need, it will make them think twice in the future. Encourage them to get a job when they are old enough Helping your child get a job such as babysitting or working at the mall is another great way to teach your child about finances and responsibility. Getting a job can help your child save up for bigger purchases such as the newest iPhone. This is also a good time to revisit budgeting to create a plan on how long it will take to save up for the desired item. When your child buys this item, they will feel a sense of accomplishment reinforcing the benefit of saving up to purchase bigger items. As parents, we have a lot of responsibilities and lessons to teach our children and how to manage money is one of them. Leading by example and teaching healthy financial habits at a young age will help set up your child up for financial success later on in life. What do you wish your parents had taught you? What lesson helped you the most when you were growing up? We would love to hear from you; Tweet us @MNPDebt. Vicky Samuels is a Licenced Insolvency Trustees within our Calgary location. To learn more about how MNP Debt can help you, contact our local office at 403.538.3187.
