As kids watch the adults in their lives use money, they catch on to its importance money has in life. The best way to instruct your child about the significance of a dollar is by showing them the many ways the dollar is used.
Begin When They're Young
As soon as your child is ready, start showing them just how money works. Children need to understand that in order to get money, it must be earned. Teach them that the things we need in life like food and clothes have to be purchased with money and that the seller is the one who determines what to charge for the items. If there is no money then you can't buy what is needed.
You also want to talk about the significance of saving money. Tell them that a kid with a few bucks can buy candy that they will eat right away or a toy that will break because it is cheap. Next explain that if that child saves the money and adds more to it over time, they will be able to buy something with more value that will last a little longer.
Have A Savings Plan
To develop a savings plan, help them decide on a percentage they can save each time they earn money. Ten percent is a good amount to work with since all they have to do is move the decimal point one place to the left. That will help them to see that for every dollar they earn, ten cents can be saved. You can also show the other examples too.
Make sure that they know that the account is not for the better short-term item, but for a "rainy day", a car or even their college fund. With the remaining 90% they get the candy or "better item" that you previously told them about. This principle is a good way to teach the about child being discipline and saving for long-term savings; like when they want to buy a house or retirement when they're grown.
It is a given that a six-year-old will not get the "rainy day" theory, and talking to them about the privilege of driving may not win brownie points; but after saving 10% over the years, they can see how it adds up. This is a valuable teaching for when they get their first job. They will be used to saving that 10% already
You can also consider setting aside a specific amount to give to charity, so kids also learn about yet one more important part of money management.
As Your Child Grows
When your child is older,take him or her to the bank with you and open savings account for them. Decide to take them to the bank monthly so they can deposit their savings into the account. Allow them to view the bank statement so they can see how money is grows with the assistance of interest.
It is a good idea for them to know that interest is a big part of saving and spending. With interest you either pay more or earn more; it all depends on what the interest is for. It is a good idea to show teenagers that if a debt is not paid for in 30 days, they will end up paying more for an item than the purchase price.
A good way to prove how unfavorable or great interest can be is by role-playing. Find an item your teenager wants to use a credit card to pay for. Create a chart showing how making only the paying the minimum changes what the total debt is, how long it will take to pay the debt off with minimum payments, and how much interest (or money lost), is paid in total.
On that same note, take the number of months it took to pay off the credit card and show how much interest he/she'd be making in a savings account while putting money away to save for that item. The amount of interest isn't much, but the point to make is if you save money to purchase the item, you will only pay that sum without the additional cost of interest.
The purpose of teaching your child about money is to get them to see the value in proper money management. - 15224
Begin When They're Young
As soon as your child is ready, start showing them just how money works. Children need to understand that in order to get money, it must be earned. Teach them that the things we need in life like food and clothes have to be purchased with money and that the seller is the one who determines what to charge for the items. If there is no money then you can't buy what is needed.
You also want to talk about the significance of saving money. Tell them that a kid with a few bucks can buy candy that they will eat right away or a toy that will break because it is cheap. Next explain that if that child saves the money and adds more to it over time, they will be able to buy something with more value that will last a little longer.
Have A Savings Plan
To develop a savings plan, help them decide on a percentage they can save each time they earn money. Ten percent is a good amount to work with since all they have to do is move the decimal point one place to the left. That will help them to see that for every dollar they earn, ten cents can be saved. You can also show the other examples too.
Make sure that they know that the account is not for the better short-term item, but for a "rainy day", a car or even their college fund. With the remaining 90% they get the candy or "better item" that you previously told them about. This principle is a good way to teach the about child being discipline and saving for long-term savings; like when they want to buy a house or retirement when they're grown.
It is a given that a six-year-old will not get the "rainy day" theory, and talking to them about the privilege of driving may not win brownie points; but after saving 10% over the years, they can see how it adds up. This is a valuable teaching for when they get their first job. They will be used to saving that 10% already
You can also consider setting aside a specific amount to give to charity, so kids also learn about yet one more important part of money management.
As Your Child Grows
When your child is older,take him or her to the bank with you and open savings account for them. Decide to take them to the bank monthly so they can deposit their savings into the account. Allow them to view the bank statement so they can see how money is grows with the assistance of interest.
It is a good idea for them to know that interest is a big part of saving and spending. With interest you either pay more or earn more; it all depends on what the interest is for. It is a good idea to show teenagers that if a debt is not paid for in 30 days, they will end up paying more for an item than the purchase price.
A good way to prove how unfavorable or great interest can be is by role-playing. Find an item your teenager wants to use a credit card to pay for. Create a chart showing how making only the paying the minimum changes what the total debt is, how long it will take to pay the debt off with minimum payments, and how much interest (or money lost), is paid in total.
On that same note, take the number of months it took to pay off the credit card and show how much interest he/she'd be making in a savings account while putting money away to save for that item. The amount of interest isn't much, but the point to make is if you save money to purchase the item, you will only pay that sum without the additional cost of interest.
The purpose of teaching your child about money is to get them to see the value in proper money management. - 15224
About the Author:
Laura Nelson-Smith is the resident editor of Career & Finance at http://www.Schmoozins.com - an online magazine for women that gives all women a voice. Join us as a contributor, schmoozer or just hang out a while.
