No matter your age, mismanagement of money is a common occurrence. Many couples have very different attitudes towards finances and that discrepancy can lead children to become confused about appropriate spending behavior.
Experts agree that teaching children about money at a young age is the best way to prevent financial hardship down the line. The more in-the-know a kid is, the better they will handle their earnings for years to come.
Read on for three ways to ensure that your child becomes a financial savvy adult.
Let you child handle money
Don’t pretend that money doesn’t exist or let your kids think that it is as meaningless as monopoly money. When your child wants to buy something – whether it’s a juice, a toy, or a video game – let them handle the transaction. Rather than just charging it on your credit card, give them the dollars and change for the item and let them experience the process for themselves. Additionally, it’s a good idea to encourage small businesses like lemonade stands, babysitting, and dog walking to teach your children about the value of a dollar. When you work for your money, you learn to see it in a whole new way. Don’t deprive your child of this opportunity.
Give your kids a a merit-based allowance
Don’t just hand over dollar bills every week. Make your children earn their allowance. Household chores like making the bed, setting the table, or helping you prepare dinner are a good way to teach your kids basic life skills and make them pull their weight. If you simply give them an allowance for doing nothing, they will think money is always waiting for them regardless of any effort they put in. Show them that their actions pay off – literally.
Practice saving early
Teach your child the value of savings by giving them a piggy bank early on and eventually deposit that into a full-fledged bank account. The earlier you can demonstrate the value of a saved dollar, the better off your child will be down the line. As your child matures, you can use the initial bank account to teach lessons about compounding interest and even retirement options. Though it might seem like heavy material for a youngster, too many teenagers go off to college with only a remedial understanding of their financial options. Teaching your kids to save early can help them out tremendously in the long run.
It’s not just children who fail to understand the intricacies of spending and saving – there are numerous adults who struggle with finances on a regular basis. Between credit cards, student loans, and mortgages, there are so many ways to hurt your financial well-being. Industry experts at Online Trading Academy work regularly with adults who are still learning to manage their wealth. Help your child manage theirs effectively today – and in the future.