Rules to Follow When Teaching Your Kids about $$$
Written by: Victoria Nygren
For many kids, “earning money” means outstretching their palms and waiting for money trees (parents/grandparents) to deliver.
To help kids learn money doesn’t grow on trees, COUNTRY Financial is teaming up with Money Smart Week and hosting fun money-focused story times for your money smart kid.
In the meantime, follow these five golden rules to get your kid on the right money-paved path:
1. Start young
As soon as kids can count, start teaching them about money – you can tailor what you teach them based on age. Use piggy banks to demonstrate the importance of saving and explain what money is to toddlers. As they move past the toddler stage, it’s a great time to teach them “need” vs. “want” – as most parents can attest, shopping trips are the perfect opportunity for this lesson.
2. Encourage waiting
Kids aren’t exactly known for being patient – when they want something, they want it NOW. To prevent a future impulse-buyer, try giving them an age-appropriate allowance in exchange for small chores. As they earn money, encourage them to save up for something they really want, even it takes some time.
3. Reflect behavior you want
Consider matching your child’s contributions to their savings – especially for long-term savings goals. Similar to an employer-match in a 401(k), this “free money” can reward the behavior you want to instill. Compound interest has been called the Eighth Wonder of the World — it won’t take long for children to see the benefits of deferred gratification and will encourage them to save when they start making their own money.
4. Include them
It’s easy to forget to include kids in the mundane world of paying bills and saving money, but it’s important for them to have realistic expectations about managing money. As you work through financial obstacles in your own life, like a too-high heating bill, explain why and ways to solve the problem. Making them a part of your personal finance decisions will make their own decisions that much easier later in life.
5. Be true to yourself
Finally, actions speak louder than words when educating kids about finance. Make sure your own home is in order; manage debt, save for tomorrow and plan your risks and insurance responsibly. Remember, you’re a role model!
Tell us what fun ways you’re teaching your kids about money and for more personal finance tips, check out the COUNTRY Financial Security Blog.Posted on March 25, 2014 at 3:50 PM