Money gives people both old and young decision making opportunities. As kids grow, they tend to become more thoughtful about money. So it is required to teach them how to shop wisely, save more and earn money through small jobs. Motivating, educating and empowering children to become regular investors and savers will enable them to keep more of the money they earn and do more with the money they spend. However everyday spending decisions can have a far more negative impact on children’s financial futures. The current economic troubles provide a fitting time to school our kids on personal finance. Below are some ways to help educate children about personal finance and managing money.
As soon as children grow, introduce them to money
Repetition and observation are two important ways children learn. A good grasp of personal finance is one of the most valuable life skills a person can have. You should take an active role in providing them with various information and communicate with children as they grow about your values concerning money .You should teach them how to make it grow, how to save it and most importantly, how to spend it wisely. Help children learn the differences between wants, needs and wishes. This will prepare them for making good spending decisions in the future.
Teach children the value of spending versus saving
You can consider paying interest on money children save at home. Through this children can help calculate the interest and see how fast money accumulates through the power of compound interest. Demonstrate and explain the concept of earning interest income on savings. They will also realize that the quickest way to a good credit rating is a history of regular savings. Some parents even offer to match what children save on their own.
Use shopping trips as opportunities to teach children the value of money
Going to the grocery store is often a child’s first spending experience. Spending smarter at the grocery store using shopping sales, coupons, comparing unit prices can help save more. Demonstrate how to avoid waste, plan economical meals, and use leftovers efficiently in order to help young people understand this lesson. When you take children to other kinds of stores, explain them how to plan purchases in advance and make unit-price comparisons and show them how to check for value, repairability, quality, warranty and other consumer concerns. Spending money can be very productive when spending is well-planned.
Ask young people to make spending decisions
Encourage young people to use common sense when buying. You can initiate an open discussion of spending pros and cons before more spending takes place. This means waiting for the right time to buy, doing research before making major purchases and using the spending by choice technique.
Make a regular schedule for family discussions about finances
This is very helpful to younger children. The discussion topics should include the difference between cash, credit cards and checks; how to avoid the use of credit; wise spending habits and the advantages of saving and investment growth. It’s also useful to discuss how to economize at home, what’s happening with the national and local economies and alternatives to spending money with teenagers. All of this information will be important as they take on more responsibility for their own financial well-being.