Teaching Children Safe Spending Habits

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It’s important to teach your children good financial management habits, including habits related to spending. If you raise your children with these kinds of habits, they’ll grow up to be wise investors and to manage their finances appropriately. Here’s some ideas to help you get started.

Give Your Child’s Allowance in The Smallest Bills Possible

Many parents give their children a small allowance every week. This is a great way to help your children learn to manage their money; once the allowance is gone, they don’t get any until the next week.

In order to encourage safe spending habits, you can take this a step further. Pay your child his or her allowance in singles or other small bills. This helps your child slow down and think before he or she spends. To a child, five one-dollar bills is a lot of money to handle; your child will take spending more seriously if he or she has to count out those bills than if he or she just has to hand over one larger bill.

Match Your Child’s Savings

Allow your child to pick out an expensive item he or she wants–a new toy, a video game or even a tablet computer. Research prices with your child and help him or her set a savings goal. Then, agree that you will match his or her savings at certain goal points.

For example, if your child wants an item that costs $200, tell your child that you will put $50 in every time he or she saves $50. This makes it easier for the child to reach his or her goal and gives the child an incentive to save.

Make a Three-Column Sheet

One of the best ways to help your child become a responsible spender is to teach him or her the difference between needs, wants and wishes. To do this, make a three-column worksheet. One column is for needs, one is for wants and one is for wishes.

Talk to your child about the differences between needs, wants and wishes. You can give him or her examples from your own life. You can also watch television programs with your child and talk about items the characters need, want and wish for.

Once your child understands the concept, ask him or her to find some pictures of some needs. You can look online together or look through magazines. When your child picks out some pictures, help him or her glue them to the needs column of the worksheet. Do the same thing with wants and wishes. Afterwards, hang the worksheet up on the refrigerator as a reminder. Ask your child to think about whether items are needs, wants or wishes before spending money on them.

Encourage Charitable Giving

Explain to your child that some people don’t have everything they need. When you give him or her allowance each week, ask how much your child wants to put towards helping other children who don’t have things they need. This is easy to do if you have split the allowance up into one-dollar bills. You can ask your child, “How many bills should we spend on helping others?” To encourage giving, you can put one dollar towards something on your child’s wish list for every dollar he or she gives to charity.

By encouraging charitable giving, you help your child become a more responsible spender in two ways. First, your child gets in the habit of thinking about how he or she can use money to benefit others. In addition, when your child wants to spend money, he or she is more likely to think about those who can’t afford necessities and appreciate the money he or she has.

If you follow these tips, your child will soon grow to be a responsible spender and saver. These financial lessons will benefit him or her for a lifetime.

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