5 Tips For Teaching Your Children Good Financial Skills

It's important to start teaching your children about the limitations of money at an early age. While it can be difficult to tell a child 'no', the earlier they can understand there is a limit to how much they can have, the easier it will be to curb impulsive or guilt-based spending as a parent.

An eight-year-old child isn't going to understand something like minimum payments and interest rates. However, a teenager that's interested in getting their first credit card will. Introducing new and age-appropriate concepts on a regular basis will give you child a better grasp of the full scope of good financial planning.

Giving your child an allowance is a great way to introduce them to the concept of saving and budgeting. Treat the allowance the same way a bank would; avoid giving the child 'advances' on their allowance in favour of better long-term planning and spending. Consider supplying them with opportunities to earn additional money by performing tasks outside of their regular chores, as a reflection of the working world.

Many children struggle with the difference between 'wants' and 'needs'. If you provide your child with money outside of their allowance, enforce that it goes toward things that are truly needed, like lunches or school clothes. Set limits for what you're able to spend on an item – for example, you may be willing to purchase a base model cell phone for your child, but if they want to upgrade to a newer or flashier model, they'll have to budget for and spend the money themselves.

When your child is able to get a job, encouraging them to get one will quickly demonstrate the very concrete realities of earning and spending money. With more children living at home into young adulthood, prepare them for life on their own by having them contribute to household bills and costs through either a flat 'rent' rate or by covering a percentage of your overall expenses.