If you have made any financial decisions that ended in disaster, you might go, “Oh, I really should have learned about this very early on.” To prevent this, it’s good to know a thing or two about money during your younger years, preferably as a child.
If not, well, at least you know now that you should be smart when it comes to managing your money. Despite that, you don’t want anyone else to go through what you did, so it’s essential to teach the next best person about money, which is your child.
To learn more about teaching your children how to manage their finances, here’s a comprehensive guide to follow:
Why It Matters
Why exactly should you teach your kids about money? Well, below are several reasons.
#1: Economic Awareness
When kids know about money and the basics of how currency works, they can grasp a pretty basic concept of economics. They know about the value of a single dollar, how it’s different from other currencies in other countries, or maybe even the idea of supply and demand and how money is necessary to keep the economy running.
#2: Financial Smarts
When children are allowed to handle money at an early age (with adult supervision, of course), they tend to be wise when spending it. Kids who can manage their money are more precise regarding purchases, such as not buying what’s unimportant.
#3: Thinking Ahead
When children handle the money that’s given to them by an adult, chances are they’ll save it for a rainy day instead. Aside from that, they might also be interested in opening their bank account to put the money they saved there. As time goes by, the money that they have saved will exponentially increase. In the future, this can also be their retirement fund.
On a related note, there’s also a good chance that your child will not be accumulating debt once they’re older since they have their own money.
While you can always teach your child about money in easy to comprehend ways, it’s easier said than done. Regardless, it’s still important to teach your child about the value of money and how it can affect them when not spent wisely. Add to that money management isn’t always taught well in schools, and it can be a pretty daunting task for the parent.
What are some ways that you can teach kids about money? Read on below.
#1: Include Your Kids in Financial Discussions
A family of five is a pretty significant number already. When financial discussions come up, it’s good to include your kids. They will know where the money will go, and they can provide small but substantial output. An example would be budgeting for food if they want to eat something, or maybe even when planning for an out-of-town trip.
#2: Open a Savings Account for Them
If you’re already giving your kids money, you should open up a savings account that bears their name. While it can be a pretty minor thing on your part, it can be a pretty big deal for your child because it has their name on it. When they get extra money from their allowance, most likely, they will turn to you to put it in their savings account for future use.
#3: Teach Them about Work and Money
Your kids can also know the relationship between work and money in a way that’s understandable. Let’s say that you have about five chores that need to be done in the house. You can instruct your child to do those chores, and in return, they will get $2 for every task they do. If they do all those five chores, they will get $10, which is a pretty significant amount already.
When they know the relationship between work and money at a young age, it gives them more reason to work hard.
Children may be young, but they can be smart enough to understand how money works, regardless of age. If you want to teach your children about the value and importance of spending money wisely, you should do it. If you guide them well enough, they will be financially wiser as they grow. If you want to teach your children about money, a savings account would be one of the first fundamental concepts that they should know about. If you’re looking to open a savings account for your children, Good Neighbors Credit Union is here to help! Aside from savings, we also offer other banking services, such as loans. Contact us today for more information!