NEW YORK, June 15, 2021 (Newswire.com) - Teaching your kid about money might have the same appeal as talking to them about the birds and the bees. Or getting a root canal. But discussing money early can help your children get a head start on good spending habits.
Don't feel like you need to teach them everything at once. After all, your 5-year-old probably isn't looking into personal loans for debt consolidation. Keep reading to find out the best ways to instruct your child on good money habits.
Ways to help your kid develop healthy financial habits
1. Don't make money taboo
You're not doing your kids any favors by avoiding the topic of money. Having regular financial discussions or showing your kids receipts after purchasing items can help make money an ordinary part of life.
2. Necessities vs. wants
Teaching your kids about the difference between things they want and things they need can help them make good financial decisions and avoid superfluous spending. Instruct them on the basics, such as rent and groceries, and the fun but unnecessary, like the latest sneakers or newest iPhone.
3. Set clear goals
Saving can seem like a drag to kids if they don't have a goal in mind. Helping your child create a savings finish line — like saving for something special they've always wanted — can help make financial wellness fun.
4. Allow them to earn and manage money
Nothing teaches money management like real-world experience. Allowing your kids to earn an allowance and then managing it will give them an opportunity to see how earning and spending really works.
5. Help them learn to save
Once your child has created that savings goal, it's time to give them a place to store that hard-earned dough. You can start with something simple, like a piggy bank, but upgrade to a checking/savings account at a bank or online later. Compound interest can be a future lesson.
6. Let your child make mistakes
Now is the time to let your kid make some financial flubs. While it might take all your willpower to watch them make money mistakes, it's better to let them do so now than in the future, when their mistakes could cost them much more.
7. Keep kids involved in family purchases
Letting your child have a say in family purchases, such as that new TV you've been planning to buy or even the weekly grocery budget, can help them feel involved in not just their finances but the family's finances as well.
8. Consider lending them cash, with interest
Your child may feel that they need the latest video game NOW. Instead of just handing them some cash, you can A) tell them that if they want it, then they need to start saving or B) lend them the cash, plus interest. Once they realize that borrowing has a cost, they might be less inclined to give in to instant gratification.
9. Be a good money example
If you want your child to have positive financial habits, it's important to demonstrate them yourself. Creating a budget, avoiding unnecessary expenses, and showing the thought process behind each purchase can help them replicate good money behavior.
These nine money lessons can turn your kid from a financial novice to an informed spender. Don't worry if it takes them some time to learn the best ways to spend and save. Good financial habits are a life-long marathon, not a sprint.