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It’s great to learn smart money habits at a young age — and that’s where you, as a parent, come in.
Key points
- The money habits your children learn could carry into adulthood.
- If you’re eager to set your kids on a solid path, it helps to give them some money to manage, follow a budget, and work toward different goals.
There’s a reason lawmakers have been pushing to have financial education incorporated into the classroom. Teaching children to manage money when they’re young could help them avoid financial pitfalls later in life.
If you’re eager to set your kids on a solid financial path, it pays to talk about money at a young age. Here are a few ways to get your children interested and schooled in personal finance.
1. Give them an allowance to manage
Once your children are old enough to understand the concept of money and what various bills and coins amount to, it pays to set them up with an allowance. This age might vary from child to child, but often, kids are ready for an allowance by about second grade. That allowance doesn’t have to be large — it can be a dollar a week if that’s all you’re looking to part with. The point, however, is to then put them in charge of making the most of that cash.
You’ll want to review the benefits of spending their allowance versus saving it. In fact, it’s a good idea to open a savings account for each of your kids so if they want to sock their money away safely, they can.
Once your kids are a bit older (say, third or fourth grade), you can even review the concept of interest and help your children track the amount they’re earning on their savings. Granted, these days, that may not be much, but it’s still a good concept to teach.
2. Show them what it means to budget
One reason so many adults run into problems with debt is that they don’t stick to a budget. And so it’s important to get your kids into that habit early.
You can accomplish this a couple of different ways. First, you can set up a mock budget to give your kids a sense of what a family’s expenses might look like. Or, if your children are older (you may want to …….