Education isn’t just about math, science, and literature. It’s also important for new students to learn important “life skills” like how to manage their personal finances. These can be important lessons they’ll remember long after they finish grade school. Here are some helpful tips:
- Give a weekly allowance
One of the best ways kids can learn how to use money wisely is through a weekly allowance. You could increase the amount on their birthday so they’ll be motivated by having more money to manage. One scheme is to give them 50 cents or $1 per year of age. Teach your child how to plan for future purchases by saving up money, for example. If they splurge on stuff like junk food, they won’t be able to buy bigger items like new clothes or video games.
- Teach about shopping and credit
Your child can learn about comparison shopping to find the best quality for the lowest price. You can even help them learn how companies use ads to create a certain perception about their products.
When your child is old enough, you can give them credit against their allowance. Negotiate how much credit they’ll get and how much will be deducted from their allowance for X weeks.
- Give them extra chances to earn money
Sometimes there are other tasks that need to be done around the house. This gives kids a chance to earn some extra money. This could involve running errands, raking leaves, shoveling snow, etc.
- Teach your child the importance of sharing
This could be people like their siblings, friends, or the needy. Your child might have the instinct to spend all their earnings on themselves, but it’s important for them to learn how rewarding it can be to share with others.
- Teach about financial planning and investments
Your child can learn about how to make a monthly budget, buy necessities, pay bills, etc. You can even encourage them to contribute to the family’s decisions when purchasing big items.
Your kids can also learn about investment issues like the rate of return and interest rates. This can be useful when they’re ready to invest in CDs, bonds, etc.
- Set a good example
Children often learn effectively by watching how adults handle certain issues. When you’re fiscally responsible it will reinforce what you’re teaching them about how to manage their money properly. A caveat is you might need to improve your own fiscal discipline. That’s OK because it will benefit both you and your kids.
- Teach your child to save money regularly
This could involve a piggy bank or savings account. You could deduct a percentage from their allowance so they can save for a rainy day. Another step is to talk to them about their goals like things they’d like to save up for.
- Require your kid to do some family chores
It’s important for kids to learn the importance of each family member helping the household to run smoothly. If you give them an allowance based on the chores they complete, they’ll also learn personal responsibility. You could deduct part of their allowance for each chore that isn’t done. Another option is to give them a bonus if they do all their chores for the week/month.