It is important to teach your children about money. Beyond knowing how much each coin and dollar bill is worth and how to add and subtract them to purchase items, they need to know when to save, when to spend, and how to properly handle their money. Too many children are growing up without the ability to handle money, which lands them in debt, and other difficult situations. Start now to teach your children about money.
Family Finances
Before teaching your children lessons about money, start with your own money skills. Do you have a budget? Do you stick to the budget? You should be putting money aside in a savings account each month, spending less than you earn and work towards eliminating any debt you have accrued. The adage that children do what you do and not what you say is true with money too. In order to teach appropriate lessons to your children about managing money, you must first manage your own finances.
Be Open with Your Kids
Many parents, for one reason or another, avoid discussing financial concerns with their children, especially when times are difficult. Instead of avoiding the discussion, be open with your kids. Use discretion with the amount of detail you share, but help your children understand how you are trying to budget, and in what ways you need to cut back. When your children express interest in having a new toy, clothes, or a special trip somewhere, discuss methods of earning money for the special purchase.
Give Your Children an Allowance
Starting at a young age, your children can learn to manage money through an allowance. This can begin as early as 5 years old. All children make mistakes, and having those mistakes made at a younger age and with smaller amounts of money is safer than a teenager or young adult who has the potential to ruin their credit rating.
Teach children that they need to save some of their money each month, to prioritize their expenses and that they should not go into debt. If you tithe, you can teach children how to do so as well, taking the first 10 percent of their allowance out to give to the Church. They should also put 10 percent into savings, whether that is a piggy bank or a savings account at a bank. The rest is fair game for spending on whatever they choose.
Start early and be consistent with your lessons about finances with your kids. Teach by example first, then through open discussion and guided practice with allowance, your children will learn how to save and handle money appropriately.
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