It is important to teach your children about money – the value of it and how to manage it effectively. It is one thing we don’t get taught in school, but we probably should. But, how do you teach your children about the financial side of life effectively? Read on to discover some top tips that will help you out.
Show them that stuff costs money – This is one of the most important lessons you can teach your child early on in life. Rather than telling them that something costs ‘x’ amount; you should get them to help you count the money and take it to the cashier to pay for things. This will help them to understand that things cost money, and this will teach them more than any lecture could.
Set an example – It is so important to set an example when teaching your children about money, no matter how old they are. It’s important to remember that your kids’ eyes are always watching you. If you’re lax with your spending, or you buy things unnecessarily, they will pick up on it, and they will start to devalue money as a consequence.
Teach them about borrowing money – When your child starts to get a bit older, you need to teach them all about borrowing money. You can do this on a basic level by charging your child ‘interest’ whenever they borrow something from you or if they borrow money from a friend that you trust. Of course, this isn’t to say you should use your child as a way to generate profit – it’s just a good way to show them an example. So, when your child next asks you for some money, you can say, if you were to borrow that in the future off a bank or lender in the form of unsecured loans, you would need to pay them back the original amount and ‘x’ amount on top. It will teach them to think responsibly whenever they need to borrow money in the future. White Mountain Partners can give you further advice on debt.
Give them the responsibility of their own bank account – Most banks today allow you to open a child’s account. It is a good idea to do this for your child by the time they are in their teens. Setting up a bank account helps them to learn about money management and it will prepare them for the future.
Make sure they are aware of the dangers of credit cards – Lots of children view credit cards as essentially free money. They hear phrases like “oh, we just used a credit card to pay for it” and they assume this will be the answer to any money problem. Make sure they realise it is not.
If you follow the advice that has been provided above, you should have no trouble effectively teaching your children about all things money-related. They will learn how to value and appreciate it, as well as some great lessons that will help them in the future when they are independent and in control of their own finances.