It's never too early to start teaching your kids about money. Good financial habits can start when they are young if you do your part to educate them.
1. Give Them Chances to Earn
There are plenty of ways that kids can earn money. You can pay them an allowance. You can pay them to do chores around the house. You can help them sell things they no longer care to own, whether online or in a garage sale. They can do chores for neighbors or friends. They can set up a lemonade stand. The first way to teach a kid money skills is to give them a chance to have money. Then, you can help them decide what to do with it from there.
2. Use Common Events as Teachable Moments
There are times in most people's lives that can become teachable moments for kids, when it comes to how money works. If your family is discussing getting a pet, you can talk about the costs associated with that. How much will the pet cost to buy? How much will it cost to feed? What about veterinarian bills? If you're moving, you can talk about the process of buying and/or selling a home, how mortgages work, why you've chosen to rent instead of buy (or vice versa), etc. If someone in the family is getting a new car, talk about financing, buying new vs. used, car insurance, gas prices, and maintenance. Opportunities arise all the time, which you can use to help your kids better understand financial skills.
3. Lead by Example
There's a better chance that your kids will learn to be responsible with money if you are responsible with it yourself. Demonstrate how to hold a job or run a business, pay your bills on time, and use credit cards, loans, and savings accounts. Keep your debt under control and make smart purchases while always budgeting and planning for the future. Discuss your decisions and practices openly so your kids can absorb good money habits.
4. Help Them Make Smart Spending Choices
If your child is earning money, or even if they're receiving it as a gift on birthdays, holidays, etc., they will no doubt be eager to spend it on things they want. Assure them that the money belongs to them to spend as they like. It's important that they are able to make choices on how they use it and then live with their decisions. You can, however, help guide them to make smart choices. For example, encourage comparison shopping and explain impulse buying. If they do wish to make an impulse purchase, remind them of other items they've expressed interest in.
5. Get Them a Savings Account (1)
Kids may not be eager to save, but you can help them appreciate the importance of it.
"To a kid, being told to save—without explaining why—may seem pointless," explains Rebecca Lake at Investopedia. (2) "Helping children define a savings goal can be a better way to get them motivated. If they know what it is they want to save for, help them break down their goals into manageable bites. If they want to buy a $50 video game, for example, and they get a $10 allowance each week, help them figure out how long it will take to reach that goal, based on their savings rate."
You can help them learn to save by getting them a savings account. Schedule an appointment or apply online for a Young Savers account, which is available with no maintenance fee until your child turns 26 years old. It only requires $5.00 to open and is allowed six withdrawals per month at no cost. It can also be linked to a checking account to prevent overdraft fees.
Help your kids earn money, and teach them to save and spend wisely. Lead by example, and use real-life events as educational moments. Follow these tips and raise your children to be financially responsible adults.
1. Please refer to the Deposit Account Agreement, Account Disclosure, Deposit Rate Sheet, and Personal Accounts Schedule of Fees for complete details and disclosures.
2. https://www.investopedia.com/personal-finance/10-tips-teach-your-child-save/