Teaching Children About Money

Teaching Children About Money

Teaching children about money is a very rewarding and worth while endeavor. Your children do not learn about money automatically even though these topics are discussed everywhere. Some of the most valuable lessons you can teach your children involve basic money concepts, such as teaching children to save money. Here are some strategies:

• Impart money concepts along with the children’s allowance. Decide whether to tie your children’s allowance to their chores. When setting the allowance, make sure your children understand what expenses must be paid with it. The allowance should increase as your children grow older and should be large enough so children Teaching children about money is a very rewarding and worthwhile endeavor. Your children do not learn about money automatically even though these topics are discussed everywhere. have money left over to make their own purchasing decisions.

• Provide opportunities to earn extra money. Give your children the option to do extra work so they can learn the relationship of work and pay. If your children want part-time jobs, make sure they understand that their first priority is to do well in school. Review your children's paystub with them. Help them understand the relationship of taxes to what they have earned. You can then explain to your children how they can reduce these taxes by setting up a retirement account.

• Allow your children to make their own financial decisions. We all have made financial blunders. The advantage to allowing your children to make some decisions in this area is that the mistakes will not be as costly and you can help them see better options afterwards.

• Encourage your child to save money. Saving for tomorrow rather than spending today is a difficult concept for both adults and children. Thus, you may need to offer incentives to encourage saving. You can also use this as an opportunity to teach your children about church offerings. You may require your children to set aside a certain percentage of their allowance for long-term goals. Or you can match your children’s savings, perhaps contributing 50 cents or a dollar for every dollar your children save.

• Explain the basics of investing. At an early age, open a bank account for your children, explaining concepts like saving and compound interest. Around age eight or so, explain how businesses operate and how investors buy and sell stocks. As their interest grows, help them purchase stocks with their savings. Since minors can’t own stocks, you will need to purchase the stock as custodian for your children. Teach your children how to research a stock, follow its price, review its annual report, and decide when to sell it. Exposing your children to these concepts at a young age will hopefully make them comfortable with investing when they become adults.

• Encourage your child to take finance courses. Many high schools and colleges offer courses that teach stock basics and personal finance. Encourage your children to take at least one of these courses.

• Set a good example. Your children will form their views on money by watching how you handle it. A saying I rehearse to myself is “if you do not like what your son is doing then make sure you are not doing it.” If you make large purchases only after careful research and price comparisons, your children will learn to be careful before making a purchase. If you use your credit cards cautiously and explain how to select a card, what items to charge, and how to pay off the balance every month, your children will learn not to abuse credit cards.

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