Every day you'll receive our family budgeting, money management and personal finance "tweets" - you'll have a better financial education in 140 characters or less.Teaching Your Children About Money: 6 Guiding Principles
April 6, 2009, 11:40 am
Financial Literacy for Kids - Springboard's advice for parents who want to break the cycle of debt with their children.
At Springboard, we’ve seen countless different scenarios over 35 years of counseling people with debt problems. But the people we help who have children all share a common wish; to see their kids avoid the financial difficulties they have experienced.Here are some basic ideas we offer to help parents break the cycle of debt and raise their children to be wise about their financial lives:
1. Start early
Many parents make the mistake of waiting to teach their kids about money. We’ve met people who think even their teenage kids are too young to be bothered with such concerns. That’s far too late; most experts agree that kids should start learning about money as soon as possible. Depending upon the individual child and his/her aptitude, 3 years old is not too early to begin teaching them about the value of money and using it wisely.
2. Use an allowance
An allowance is the first, best tool for teaching your kids about money. Giving them a regular income will help train them for their working life. We believe it’s important to tie the allowance to household chores and tasks that are the child’s responsibility. This will teach them an invaluable lesson about the relationship between work and income.
3. Help them establish a bank account
After you’ve given your child his/her allowance, make sure it is deposited in a financial institution. Teach your children that the best place for their savings is in the bank or credit union, not under the mattress. Find a local bank or credit union that will set up custodial accounts for children. Wise financial institutions know that these kinds of accounts will help them create life-long relationships with their banking customers.
4. Involve them in the household finances
It’s crucial that you teach your children the value of money, and the value of purchases. They need to learn how far their allowance, savings, and eventually their paycheck will go. A great way to help them learn these lessons is by including them in part of the monthly bill-paying ritual. If they understand the costs associated with running a household, from mortgage payments to utilities, then they’ll be less likely to take them for granted.
5. Let them get a summer job
Many parents don’t think their teenagers should have to work. Consequently, many teens grow into adults who don’t think they should have to work. The best way you can prepare your kids for their adult lives is to let them start early with part time or summer work. This will help them evolve from the allowance you set up in their childhood into the adult world of work. Good early experiences in a real workplace, even a minimum wage fast food job, will teach them how to handle themselves as part of the grown-up workforce.
6. Lead by example
Children learn everything from observing the world around them. This especially applies to the way their parents conduct themselves. Every time you go through a checkout line with your kids in tow, they are watching you and learning. That means it’s prudent to avoid impulse buys and frivolous purchases in front of the kids. You can’t expect your kids to be good stewards of their money if you don’t manage yours well.
Many parents make the mistake of waiting to teach their kids about money. We’ve met people who think even their teenage kids are too young to be bothered with such concerns. That’s far too late; most experts agree that kids should start learning about money as soon as possible. Depending upon the individual child and his/her aptitude, 3 years old is not too early to begin teaching them about the value of money and using it wisely.
2. Use an allowance
An allowance is the first, best tool for teaching your kids about money. Giving them a regular income will help train them for their working life. We believe it’s important to tie the allowance to household chores and tasks that are the child’s responsibility. This will teach them an invaluable lesson about the relationship between work and income.
3. Help them establish a bank account
After you’ve given your child his/her allowance, make sure it is deposited in a financial institution. Teach your children that the best place for their savings is in the bank or credit union, not under the mattress. Find a local bank or credit union that will set up custodial accounts for children. Wise financial institutions know that these kinds of accounts will help them create life-long relationships with their banking customers.
4. Involve them in the household finances
It’s crucial that you teach your children the value of money, and the value of purchases. They need to learn how far their allowance, savings, and eventually their paycheck will go. A great way to help them learn these lessons is by including them in part of the monthly bill-paying ritual. If they understand the costs associated with running a household, from mortgage payments to utilities, then they’ll be less likely to take them for granted.
5. Let them get a summer job
Many parents don’t think their teenagers should have to work. Consequently, many teens grow into adults who don’t think they should have to work. The best way you can prepare your kids for their adult lives is to let them start early with part time or summer work. This will help them evolve from the allowance you set up in their childhood into the adult world of work. Good early experiences in a real workplace, even a minimum wage fast food job, will teach them how to handle themselves as part of the grown-up workforce.
6. Lead by example
Children learn everything from observing the world around them. This especially applies to the way their parents conduct themselves. Every time you go through a checkout line with your kids in tow, they are watching you and learning. That means it’s prudent to avoid impulse buys and frivolous purchases in front of the kids. You can’t expect your kids to be good stewards of their money if you don’t manage yours well.
For more tips and advice on teaching your kids about money, download a .pdf of our “Raising a Money-Smart Child” seminar booklet free of charge from our web site, www.credit.org.
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