It’s never too early to start teaching your children the value of a dollar. I love this topic because we have so many opportunities every day to teach our children about money in age-appropriate ways.
Shopping is a golden opportunity to talk to your children about money. When your child shows you something that they would like to buy, your first response should be, “How much is it?” This helps them become conscious that there’s a price associated with any purchase. Another teaching opportunity when shopping is to take them to the clearance rack. Show them an item that’s on sale & help them calculate exactly how much that item would cost based on the percent off. This teaches them that you can buy things at reduced prices.
Take your children to a bank and help them in Setting up a Savings Account at the age they start receiving money either as gifts or because they’re working (even if it’s just babysitting or odd jobs). This will teach them that out of any money they earn, they should put a certain percent away in a savings account, put some away for a future purchase and spend some for immediate gratification.
Another great thing to teach a child is about Setting Goals and Saving for Them. Have your child identify something that they really want, like an iPod or Xbox. Every time they receive money, encourage them to put a little into their long-term savings account, spend a little & save the majority for this larger purchase. This will instill in them the skill of saving up money in advance for the things they really want.
Lastly, take time to teach your children the good & the bad of Using Credit Cards. The next time you use a credit card to buy gas or groceries, explain to them that this card compiles all of your purchases & generates a bill for the total that you have to pay once a month. Show them the bill at the end of the month & remind them of the various places that they saw you use it. Or, login to your account when you get home & show them the pending charges on your card. When you go to pay the bill in full, explain to them that you were able to use the card appropriately by consolidating purchases. Even if you’re unable to pay the bill in full, take the next step in explaining to them how interest is charged & accrues on a credit card. Relate it back to what you showed them at the clearance rack by buying something at a certain percent off by explaining that if you don’t have the ability to pay the credit card bill in full it’s as if you’re willing to pay a certain percent (equivalent to your interest rate) more for the items. This is the way that we can teach our children not to make the same mistakes that so many Americans have made living in the age of credit cards.
If you’re really going to make the effort to teach your children about money, there are a plethora of online resources available to help your children learn by Playing Money Games.
I hope this gives you a few ideas of ways you can teach your children about money. Remember virtually every day of your life is an opportunity, so the most important thing is to talk about money. Communicate with your child & I think we’ll be able to raise a generation of financially healthier children.