Money is what makes the world go around. Love it or hate it, money is important. The problem is most young adults are entering the “adult world” with almost no idea how to manage their money.
As my son just turned 18 months, he's still a little too young to understand and appreciate the value of money.
But it's still on my mind about how I'm going to teach him to appreciate and value the importance of money and money saving tips as he gets older.
While I'm sure that things are destined to change as time progress, here are a few of the things that I feel will be beneficial when he is old enough to appreciate:
1. Show Them What You're Working With
Currently, my wife and I use a basic Excel spreadsheet to keep track of all our monthly expenses and our monthly cash flow. I think it will be truly beneficial to sit down with our son to kind of show him what we have coming in versus what we have coming out.
We would then show him what we contribute towards our savings account, what we tithe, and also retirement savings.
This way we show him that every dollar that comes in is not spent, and a good chunk goes toward either the savings account or saving for his college education.
Most kids have no idea how their parents manage their money. They don’t know where the money is coming from or where the money is going to.
The first step in teaching your kids the value of money is showing them how you use it. Show your children how much you spend in certain areas or how much money you save each month.
2. Get Techy
Nowadays there are many money education sites that can teach kids the basics of money.
One example that comes to mind is kids.gov. Before they plan to work for money, they must be comfortable with the real thing. They need to touch dollars and coins, count them, stack them and learn that they are concrete things.
When they become a little more advanced, you could even consider games like the Stock Market Game. Kids are able to invest $100,000 of fake money and purchase securities in real time. That way they could really see how the market really works.
What kid doesn’t like to play games? There are dozens of excellent games out there which can teach them about money and finances.
3. Walk the Walk
Kids watch more than they listen to lectures. You might be the greatest money manager in the world, but if you don't show and tell your kids about what you're doing, they can't learn from you.
4. Make allowances count
Growing up my parents gave me basic chores of just mowing the lawn and taking out the trash, and the only thing I really got paid for was the lawn.
I think, though, that by incorporating other weekly tasks for my son to do, will give him both a sense of responsibility and also an appreciation for the money he earns for the task he does. Go beyond spending money.
The older your child is, or depending on their maturity level, you can add more chores or give them more responsibility. While there is nothing wrong with giving your children money or gifts, not making them work for something in their life can leave them without a sense of money.
You don’t have to force them to do everything around the house. You can give them options.
Once they have reached a certain age, you can start offering them opportunities. You can still require them to do the basic chores around the house. Find some additional things to do around the house, let them decide if they want to take up those jobs for money or pass.
5. Play Match Maker
Just like a 401k match, you can add to their savings total. That should give them an incentive to fill their piggy banks. Don't forget about the grandparents! Let them match, too.
As your child gets older (or even when they’re still young), you can open up a bank account for them. There are plenty of banks which offer savings account for kids.
In fact, there are some banks out there who offer decent APY. for the kid’s savings accounts. Not only can you teach them about saving money, but you can teach them how banks work and some of the advantages of finding a good savings account.
There are a lot of banks out there where you can open an account in a matter of minutes.
6. Be Nice, Just Not Too Nice.
Even if you can afford to give your kid a comfortable allowance, don't. By about age 12 kids should do small paying jobs for friends or family members. At 16 they're capable of getting summer jobs and saving for their own expenses.
No matter how you do it, teaching your child the value of money is imperative to their financial success. Give your child the tools they need to become a financial champion!
7. Get out the Credit Card
As soon as your child turns 18 (probably even before), they are going to be flooded with credit card offers. You know how many offers you get in the mail? Now imagine getting those offers as an 18-year-old.
Before your child is hit with those “magic cards,” make sure they understand the responsibility and fees which come along with the credit card.
I’m sure you’ve heard stories of college students who racked up thousands of dollars in debt after they got their first credit card (and that’s what the credit card companies are hoping for). Don’t let your child be another one of those stories.
Regardless of how you feel about credit cards, make sure your kid has the information they need.
8. Need Vs. Want
One of the most important things you can teach your child (and you can get started at a young age) is the difference between a “need” and a “want.”
Sure, they may want a new cell phone, but it’s not a need. They may want a new video game, but it’s never going to be a need.
Walk them through the differences between a need (heat, food, water, etc.) and wants (gadgets, candy, etc.). When you’re walking through the grocery store aisle, there are plenty of ways you can show your kids the differences between the two.
9. Talk about Taxes
Once your kid is wandering the high school halls, it’s a good time to explain taxes and how they operate.
You don’t have to be a CPA to explain taxes to your kid. Show them how much you pay for taxes. Walk them through the process and explain the various kind of taxes you have to pay every year.
Teaching Kids about Money
For a lot of parents, they don’t think about teaching their kids about money. They are more concerned with keeping them happy and healthy, which is great, but you should also help them understand finances and the importance of managing them.
It doesn’t all have to be sitting down looking at numbers on a budget. You can turn a grocery store trip into a lesson. There are fun apps and videos you can use with your children.