“I believe the children are our future. Teach them well and let them lead the way.” Wise words sung by Whitney Houston. Words that carry so much weight but how do we as parents, as a society, teach those kids in ways that will carry them successfully through the future?
As parents, we strive to teach our children to be polite, caring and independent. Part of their independence is knowing how to manage money, yet many parents fall short when it comes to teaching their children about finances and money management. The school curriculum teaches math skills, but they don’t teach kids how to budget and run a household on a set income. They are not given practical information regarding how to pay bills, write a cheque, balance a check book, budget or plan financially.
It is always to the benefit of the child to start learning the valuable skills of accounting at a young age. Here are some tips on how to teach your children about managing money:
- Save it or spend it? This is where we teach the child to consider the difference between want and need. Do they really need that video game or cell phone? Maybe a new pair of shoes would be more practical? They learn the valuable concept of delaying gratification and decision-making skills that will carry them through life. Help them develop a savings strategy by encouraging them to divide their money into two groups; saving and spending.
- All things cost money – and where does that money come from? This is the chance for parents to talk to their kids about their jobs and what you do to earn money. Discuss ways that your child can earn their own money through allowance for doing chores for example.
- Budget: Discuss your financial goals with your children and explain how you budget and save to achieve that goal. This is a great opportunity to help your child develop their own budget for that video game or cell phone.
- Bank accounts save and grow your money: Take the kids to the bank and open their first savings account. Encourage them to make regular deposits into the bank and explain that the bank will help their savings grow by depositing interest every month. Kids find it thrilling when parents show them their bank statements and they can see the interest they earned just for saving their money!
- Borrowing money will cost you: Credit card, auto and home loans may lead your teens to believe borrowing money is an easy way to get what they want. Discuss responsible borrowing and the true cost of purchasing with credit.
Teaching kids about money and how to manage it may be a daunting task but be assured, those lessons will help you child develop skills that will carry them through life and help them to avoid many of the financial pitfalls that they may encounter as adults.