Teaching Your Children The Essentials of Personal Finance

Managing money properly does not come easily to everyone. Like any type of skill that you want to have under your belt, personal finance takes a bit of time and education in order to learn it. This is especially true for children, teenagers, and young adults. For people under the age of twenty, getting the know-how about money management will most likely not come through newspapers, blogs, or books about personal finance. Actually, they might have a hard time learning it on their own, to begin with. Fortunately, they’ll have you at their side to give them the guiding hand that they need.

If your children don’t yet understand the value of a dollar, it will soon become important for you to set a healthy example. If you want your kids to learn how to manage an income with a responsible attitude, the sooner you start teaching them, the better.

Lead By Example

If you want your children to learn how to be responsible with their money, it’s a good idea that you do the same, if you aren’t already. After all, children, especially the younger ones, get their knowledge by watching their parents.

Firstly, consider how you deal with the income you’re currently earning. Are your children aware of your job, and do they understand that you make money from it? Do they see how you spend that money? Do you pay with cash, debit, or a credit card? Do you have any debt to pay off, or do they understand what debt is? Whatever your methods might be, it’s always a good thing for them to learn about the responsible choices you make with your money on a daily, monthly, or yearly basis.

When your children see that you’re making tough, but responsible decisions with your money regularly, they’ll be more prone to developing a keen sense of how to handle their own money once they start to earn it for themselves.

Teach Them By Including Them

When you’re trying to help your children understand how being responsible with their money is a good thing, including them in some of your own financial resolutions could definitely be beneficial to both you and them. Depending on the way you choose to live your life, and how old your children are when you decide to start teaching them, it can be difficult to educate them on every little aspect of your financial status. However, the overall objective should be to help your kids learn that spending money is a decision that they shouldn’t make without putting some thought into it.

In many instances, you might not want to include your children in every financial choice that you make. If this is the case, simply explaining to them why you make various decisions financially could go a long way. Let’s say, for argument’s sake, that you and your spouse have come to the conclusion that eating at restaurants or getting take out every other day is costing too much. Maybe you’d rather save that money to take the family on vacation. The unfortunate truth? Most kids love junk food. So, if they’re unhappy about not getting to eat at their favorite restaurants, help them understand that saving money not only means being a responsible grown-up but also that they’ll get to do other fun things in the future because of it.

Click here for our article on How to Maintain an Effective Budget.

Help Set Financial Goals For Your Family

While we’re on the subject of financial goals, an effective method of teaching your children about the value of saving money could be to plan for something that the whole family can make contributions to. Whatever that goal is, be it small or large, it’s all up to you to plan for it and include your family in every step of the process.

If you’re trying to plan for an expensive family trip in the upcoming year, fill your kids in on how much it will cost, and how much time it will take to save up enough to pay for it. Show them the different ways that the family can save money. For example, learning to appreciate the toys and other things they already have, instead of buying new ones. If your kids are getting too old for their current toys, they can help by selling them in a garage sale during the summer season, along with anything else they don’t use anymore. If, and when your children are old enough get jobs of their own, you can always ask that they contribute a small portion of their earnings to help out with the cost of the trip.

Maintaining financial goals for your family is not only a positive technique in teaching your children the responsibility of earning money and saving it, but it’s also a good way to reach the goals that you might have been putting off for financial reasons.

Teach Them The Responsibility of Earning Money

As most parents know, earning and saving money is not always a simple thing. It takes a lot of time, effort and responsibility in order to build up the finances you need to give your children the life you want for them. On top of this, it’s important to show them just how much effort it really takes. If they want a new pair of shoes, the latest video game, or anything else that’s not totally necessary, teach them to earn it for themselves. Ask them to help out around the house by doing the dishes or the laundry, walking the dog, shoveling snow off the driveway, vacuuming, or any other chores that need to be done. Once they’ve been doing these chores for a month or two, hopefully, they’ll come to realize all the work that goes into maintaining a happy household, and in doing so, learn to appreciate what they have.

Let Them Manage Their Earnings

When your children are old enough to get jobs and start making money of their own, try letting them manage their income for themselves. Of course, you can help them out by guiding them and throwing in a bit of advice every now and again. At first, they might not believe in your advice, or take it without complaint, especially when it comes to teenagers. However, establishing just how easy it can be to spend and waste money, versus how difficult it can be to earn it, is something everyone needs to go through at some point in their lives.

It might be slow going at first, but sooner or later they’ll start to learn these things for themselves, and be grateful that you’ve helped them secure a solid financial future.

If you want to get started on a family budget, take a look this other article.