When it comes to being a good parent you could probably name off five things “good” parents do without even thinking about it. Of all the things that came to mind, did you even consider the importance of teaching your kids about money? If not, don’t beat yourself up too much; knowing how and when to teach your kids about the value of money can be easily overlooked.
Teaching your children to value money is one of the most important things you can do to help your children get on the right path towards financial responsibility. As with most lessons you teach your children, you have to lead by example. Having a strong role model helps to cement the types of habits you want your children to have for themselves.
Give your children a healthy approach to money management by teaching them the importance of saving. Better yet, let them see the progress they are making. If your children receive money as gifts for holidays or birthdays, explain the importance of putting some of that money away so they’ll have it another day. Find a clear jar or container to save the money in. Take the time to be creative and help your child decorate and personalize their savings container. Chances are, if your child can see they are making progress, the jar filling up, they will get excited and feel accomplished.
For older children who are earning their own money by cutting grass, babysitting, or having a part-time job, help them to understand how money works with a practical approach. When you are out shopping and your daughter “absolutely has to have” the pricy and trendy top, break down the cost of that top. Explain how many hours or lawns she’ll have to mow, to have the money to make the purchase. By putting purchases into equations your child can relate to, you help them to develop a realistic perspective of how far money does (or doesn’t) stretch.
Encourage Savings Over Debt
Saving money is one of the most important lessons to teach your children. Encourage your children to save money by offering incentives. Help your child to set a goal they would like to reach. To build their excitement and eventually their sense of accomplishment, offer to match their savings. Create opportunities for them to earn money by doing chores beyond your normal expectations. They will learn early on by planning and having patience, they can get what they want.
By feeling the accomplishment of earning the benefits of saving money, you can avoid the sense of instant gratification that leads to incurring debt needlessly. When children learn to value and appreciate money, you can help them to avoid problems down the road because they understand getting what they want requires patience and perseverance.
If your child is already an adult who is struggling with bad debt, point them to the experts at Hawkeye Associates to help them get a debt consolidation loan to get that under control. They have lots of experience and positive reviews online.
Debt consolidation allows one to combine multiple monthly bills into one easy to manage payment, usually at a lower interest rate too!
If you let your children earn an allowance, make sure they understand the responsibilities that come with earning an income. If your child doesn’t complete the chores they are responsible for, don’t give them the full allowance. Explain that money is earned and certain expectations need to be met. On the other hand, if they go above and beyond, reward them with a small bonus they didn’t expect.
Schedule a work week. Let your children know that they will receive their allowance every Friday. Also explain that once they spend that money, it’s gone. It will help them understand how their decisions have consequences and hopefully avoid the need for debt consolidation later in life.
Regardless of what approach you take, the most important thing is your child understands money is earned and when it’s gone, it’s gone.