There are so many times in life when we think “I wish I had known that” or “I wish I had learned that as a kid”. Kids these days are bombarded with knowledge that we never even dreamed of at their age. Many of us often wish we had the education that our kids are getting.
While they are learning all about the world and the global nature of life in the 21st century, there are still many things that school will most likely not teach. Schools no longer offer Home Economics classes or teach many of the life skills necessary to run a household, global or not.
With the tough economy and many families struggling to make it through, it’s more important than ever to not only get a handle on your family’s finances, but to teach your children how this is done and the benefits it creates. Good financial sense, from the basics of balancing a checking account, to creating an age-appropriate financial plan will save lots of struggle for your kids down the road.
There are many ways to start teaching your kids how to save money. You can start early or start when they get their first job. Most importantly, just start!
Make a Savings Chart – Every parent has seen these at their child’s school. A big poster board of a financial goal such as a new play structure or school equipment. Every family contributes what they can and the pie chart or bar graph gets colored in until the goal is reached.
A chart is a visible reminder of the goal and it helps to build the anticipation and excitement around reaching it. Small children will really connect with saving in this visual way. It’s a great way for a family to save money towards a fun trip or vacation.
Match Their Contribution – Just like your employer matches your 401-K (if you’re lucky) encourage your kids to save the maximum by getting “free’ money from you. This will help their savings to grow faster and really create a sense of accomplishment in them. Be sure you stick to it if you say you are going to match.
You could add your contribution as they go or you can wait until a specified time. Have them count up what they have saved and then add your matching contribution to it.
Set Priorities and Goals – Kids are born with an “I want everything” attitude and it is one of the responsibilities of parents to rein this in and help them to set priorities and goals for their money. Maybe they want a new shirt, a short term goal but know they will need a new laptop for college next fall, a long-term goal.
Help them to prioritize based on which is more important or the costs versus benefits of giving up one of the options.
Play Monopoly – Yes, the game of Monopoly, or Life. These games can teach younger children a little bit at least about the value of money and what it’s like to lose it all! While it is for fun and games there will be some learning going on for your child. More importantly, there are many opportunities to open up conversation about financial topics and about the reality of money versus the game. Kids may not be amenable to having a sit-down about finances and a light-hearted game can be a great way to make your points without too much rolling of the eyes.
Share Your Experience – Tough economic times are a learning experience for us all. Within reason, you should open up to your kids and share some of the struggles you may be facing as well as how are you approaching them. Healthy talk about money includes very realistic and frank facts about when there is enough money for something and when there is not. Finding alternatives and solutions when there is not is one of the tools you should equip your children with for a successful life.
Differentiate Between Needs and Wants – Kids have a hard time realizing that they can’t have everything they want. It can make teenagers especially feel inadequate, left out, different or just plain bad. However, if they are given healthy attitudes about needs versus wants they will better be able to shrug off some of life’s financial disappointments. In fact, they may even take to differentiating themselves from the crowd by doing something different, which is less costly than what everyone else is doing.
Create a Simple Budget – This is a great skill to teach your child who has their own job and income. What are they going to do with their new-found wealth? To set them up for successful life skills, start at the beginning with a very simple budget. Include an amount for savings as well as an amount for some item they will now be purchasing on their own, perhaps gasoline for the car. The rest they can use as they wish, towards a goal or just for fun. After all, they are still kids.
Most of All: Set a Good Example
Monkey see. Monkey Do. We are our children’s best teachers. No matter what they see and hear elsewhere, their frame of reference is their home and family. Be open with your kids about your savings habits and goals and how you run your household budget. Show them the books! Of course, it is also important to teach them discretion in keeping personal financial information to themselves.
Teaching your child the essential skills of saving, budgeting and spending will serve them well throughout their lives.
About the Author: Wendy Brunner is a freelance writer focusing on articles and blog posts on a variety of topics including travel, internet marketing and personal finance. When not beachside in Plum Island, Mass. she can be found in the Sonoran desert of Fountain Hills, Ariz. You can follow her on Google+.