Smart financial habits start young
It’s never too early to learn the value of money. Teaching your children early in life how to handle their finances can help put your child on the right track by encouraging smart habits that will last a lifetime.
So how can you get your young children interested in saving? One way is to make saving fun. You can teach your children how to budget and save by starting them out with an allowance and a savings account. Most financial institutions offer youth savings accounts. Youth accounts are generally themed to make the process fun and interesting and usually have lower minimum balance and opening deposit requirements. If you decide to start them out with an allowance make it clear what kinds of expenditures the money is for, and that they are expected to save some of it. For example if their allowance is $10 a week maybe you would encourage them to save $5 and to budget the remaining $5 on what they see fit. Teaching children how much things cost and how fast money can be spent can help them understand the value of a dollar. Help your children establish attainable goals and develop a spending and savings plan to reach the goals.
Teens and money
Teaching your teen about money management can be daunting; many teens have started earning their own money through part-time jobs and are inundated with ways to spend it. Consider helping your teen establish a checking and savings account; show them how to record their transactions and check their statements. Teaching your teen to be responsible with the money they have earned, and the feeling of ownership over their money, is something that can benefit them later on in life.
Helping teens understand credit will help them respect it. The more teens understand how credit cards work, the concept of interest, how long it can take to pay off a balance and the negative effects of bad credit, the more likely they are to use smart spending habits when using credit cards.
Be a good money role model
One of the best ways to promote sound spending habits is to exhibit them. Get them involved with your day-to-day personal finance decisions. Show them the basics of bill paying, how to make a list for efficient grocery shopping or show how to plan for a big-ticket item and how to avoid shopping on impulse. The way you spend can have a significant impact on how your children will spend.