Credit cards and expenses
Many children watch their parents live on credit cards. When there’s something new that they want, or an upcoming obligation, they see their parents reach for the card and take care of it, almost like it’s magic. Relying on credit cards does little to truly teach children about managing money or being financially responsible adults. Here are some tips on finding ways to teach children about money.
Teaching the value of money
Schools teach reading, writing and math, but rarely do they cover everyday tasks such as paying bills, understanding budgets, or working with interest. It’s up to parents to do the educating of children in this area. Here are some steps for you if you’re trying to teach your child about money:
- Start teaching children early about money. Gone are the days of letting a child live completely oblivious to finances. In tough times, children also need to know that money must be managed. Some ways to accomplish this include teaching kids about how to save up their cash. Let them see their dollars accumulating in a box or drawer. When it’s full enough let them take it to their bank account and deposit it. Visual aids help to get a message across, and they don’t make all those picture books for nothing. If they see money accumulate, they get an idea of how it works later on.
- Teach children where money comes from and the correlation between work and pay. Children are naturally led to think that money “comes from Mommy and Daddy.” When mom and dad are out of cash, normally credit cards take care of purchases. Each and every child should be taught the principle that money comes from work. And then how money buys things. And then how we use things and repeat the cycle. Paying children for tasks that are above the ordinary, like cleaning out the attic or the garage, can help them to see value in labor.
- Consider offering your children allowances. Experts debate the effectiveness of allowances and whether or not children should be paid to do everyday chores. Children could be paid for large tasks that help out around the house, but don’t pay them for what they are supposed to be doing anyway. Responsibilities or daily/weekly chores could include keeping their rooms clean, sweeping, mopping, cleaning up toys and assisting with laundry. On the other hand, if the family is having a garage sale, they could pay the child for keeping everything lined up neatly or organizing goods to be sold.
- Make the savings plans interesting. Depending on age, of course, get them involved in saving money. A younger child might be involved in something like decorating a piggy bank. For an older child it may mean helping them save for a bicycle or larger item.
The importance of finances
With the recession hitting hard, it’s more important than ever to understand how finances work. Children need instruction from parents on the acquisition, saving, budgeting of money, and how credit cards and loans work, and how to manage it all. For the sake of the security of their future, they need to be presented with information they can understand and learn from. Working to educate children today helps create financially responsible citizens of tomorrow.