Parents share a lot of knowledge with their children in the hope that it will help them grow into successful adults. However, there is one topic that most parents try to avoid at all costs—and no, it is not what you are thinking.
For many parents, the idea of having a “money talk” with their kids is terrifying. The biggest reason for parents’ avoidance of the topic is that they don’t believe they know enough about money themselves and fear that they will give their children the wrong information.
Although discussing the topic of money with your kids can be uncomfortable, it is a necessary step in their growth and development. Few schools teach their students how to handle money the right way. Without learning money management skills at home, your kids will likely have a few nasty surprises when they get older.
Are you worried about your children’s money skills? Consider the following four tips for teaching them financial literacy:
1. Let Kids Experiment
An effective way to help kids learn how to budget is to allow them to make mistakes. Giving them a small allowance each week is the perfect incentive for them to learn how to budget. Do they want to blow this week’s money on candy and a cheap toy or save a few weeks’ worth to buy something they really want? Of course, some children will still be impulsive and will want to spend their cash right away, but it’s better for them to learn to make mistakes with $10 than $10,000.
2. Include Children in Household Budgeting
Do you have a shopping or entertainment budget each month? Try including an older child in budget planning for the next month. Kids learn their lesson quickly when they have to forego entertainment for two weeks because they blew the funds for that in the first half of the month. Another great idea is to set a budget for this week’s grocery shopping, make the grocery list, and take your child to the grocery store with you. As you place items in your cart, have your child add up the cost of each item until you reach your budget limit. This will teach your child how to stay within the budget when making purchase choices.
3. Gameify It
Turn budgeting and saving money into a game. Give your shopping lists to your younger kids and let them search for coupons and sales online or in the newspaper. You could promise to put a percentage of the money they save into a piggy bank and let them use the money to purchase something special down the road. You could even encourage older children to learn lifelong investment skills by helping them get started on a stock trading simulator, such as The Stock Market Game.
4. Make Them Earn It
Knowing how to save, invest, and spend money is important, but one of the best things you can instill in your children is a good work ethic by allowing them to earn their own money. Whether your teen works part-time at the movie theater or your little ones start a lemonade stand, the willingness to work hard and be rewarded that accompanies such endeavors is one of the best financial lessons you can pass on to them.
These tips are just the beginning. What’s more, as you teach your kids to manage money, take the chance to learn more about it yourself!
This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.