Many parents understand that raising children means preparing their lunches for school, helping them with their homework and driving them to soccer practice. However, some parents may not realize that one of their most important jobs is to teach their children about the basics of money management.
Here are some tips to help you teach your children how to save, invest and handle money responsibly:
An allowance is the best teaching tool and experts say it should not be linked to household chores. Instead, use it to make kids responsible for purchases such as toys, movies, and school lunches.
Raises in allowances should be given only if a child's expenses increase and if they can demonstrate – by documenting their spending – that they really need it.
Many adults haven't mastered the art of saving to achieve their goals, but that's no reason why their kids shouldn't. Start around the age of six or seven by giving them three glass jars or piggybanks–one for spending, one for short-term savings and one for long-term savings.
Open a savings account in your child's name and explain the concept of interest and why it's important to put money away every month. Create incentive by matching their savings and going over their statements with them.
Lead by example. Whether you're an impulsive shopper or a careful spender, chances are your children will be too.
Discuss major household purchases with your kids and why you opted to buy one product over another. Encourage your children to turn their interests into money-earning activities such as arts and crafts, babysitting, yard work, and dog walking.
If you would like some help developing a strategy to help your children manage money, we’re here to help.
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Two years ago, Martin didn’t give much thought to his bank accounts. Working in information technology and contracted by a major oil company, at 27 years old his spending wasn’t a problem.