School Age Children: Parenting Tips: Teaching Your Kids about Financial Planning
Learning how to manage our family finances is a skill it takes some of us a lifetime to learn. As a result, many parents are anxious to teach their children about how to properly budget their money. The problem is that many of us wait too late to teach them, either because we assume they’re too young, or because we want to be in control of their spending.
However, teaching your children about sound financial planning is actually one of the greatest gifts you can give them, as it will be advice they can carry with them for years to come. Of course, the best way to teach them is to show them, so read on for dos and don’ts on how to teach your family about financial planning.
When it comes to involving your children in the family’s finances, there are a number of things you can do to help instill in them the value of a dollar, such as:
- Involve them in some financial decisions. Although it is not necessary – or advisable – to expose your children to decisions regarding housing and bill payments, it is a good idea to get them involved in their own financial decisions. For example, tell your child that if he decides to spend all of the money in his piggy bank on a new baseball card, he won’t be able to buy himself an ice cream at the park on the weekend.
- Set up a household job jar. In other words, assign household chores and put the predetermined financial remuneration in the jar. Whoever completes the task will then get the money. Keep in mind, however, that emphasizing rewards for minor tasks such as keeping their room clean or cleaning up after themselves, is probably not as beneficial as rewarding bigger jobs, such as raking the leaves, shoveling the driveway, or vacuuming the house.
- Show them good budgeting. Learning to budget is a lot easier when you have a good role model. Demonstrate to your children the importance of planning their spending by drawing up a shopping list before you get your groceries, gifts, or other purchases.
On the other hand, there are certain behaviors you should avoid, which could actually have the opposite effect. These include:
- Teaching them too late. Some experts say children can be taught the basics of financial planning as early as age five or six. The important thing is not to wait until your child is a money-hungry pre-teen before you broach the subject.
- Arguing about money in front of your children. If you and your partner are experiencing financial difficulties, don’t make it an issue for your children. While it is important to show them how to handle money – even in tight situations – it is important not to fuel a guilt association, as this could lead to reckless spending habits later in life.
- Doing everything for them. It is understandable that parents want to have a handle on their child’s spending. However, if you never teach them how to manage their own money, it will be even harder for them to learn once they're forced to handle things on their own. It’s important to give them a certain amount of control. For example, set up a bank account but install a certain spending limit per day, which can increase as they get older.
- Preaching to your kids. Although you may have earned wisdom over the years, your children are not as likely to understand this concept if they haven’t had an opportunity to learn it for themselves. This is especially important to remember when your child is having a fit in the clothing store because you won’t buy her the pair of jeans she wants. Just stick to your guns and eventually she will get the point.
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