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In a capitalist world where money and finance have become the staples to our way of living, teaching children the correct way to handle money has become increasingly important. Many kids have a huge lack of understanding of the value of money and how it is applied, but with some simple actions during your child’s adolescence, you can make them more financially literate.
Here are 8 helpful tips to teaching your kids better money management:
- Use Cash—yes, we do mean that you, as a parent, use cash when you are purchasing items. Debit and credit are so much simpler, but the “magical card” doesn’t give your kids a great visual on how much things cost. The cost simply disappears with a swipe, since children do not see the bank statements and transactions. Using cash allows children to see the literal cost of items tangibly.
- Bank and ATM Visits—this can be a great way to explain to your child how a bank works: as a storage facility for the money that you have already worked hard for. Many banks are also happy to give your kids a small tour and show your children how money is stored or counted.
- Grocery Shopping—bringing your kids along to run errands is a great way to also teach them money management, since you, as a parent, are in the very act of managing your money! Checking the sale values for the best bang for your buck and teaching your children how much items cost is a great starter to introducing them to the commercial world
- Build a Budget—show your children the financial responsibilities that must come into play before you can have “fun money.” Build a budget for your money with them by your side so that they can see how finances have to be accommodated. You can also build a budget with your kids if they receive an allowance.
- Allowance—offer your child a way to make their own money early on through helping out around the house and doing chores. This money can be spending money or saved money.
- Utility Bills—show your kids how expensive bills can be so that they get a realistic perspective of how much comfortable living costs early on. Explain why you have to pay for each of the bills that you pay for, and the consequences if you do not pay those bills.
- Clear Jar System—have your kids store their extra coins and money in a clear jar, so that when their money accumulates, they can actually see the pile grow.
- Sharing—it is just as important to share our money with others who may need it as it is to save it up. Along with a jar for saving money, or spending money, create a jar that is designated as the “share/donate” money jar and have your child learn the values of giving back to the community early on.