Wednesday, August 31, 2011

Raising Money Savvy Kids

One of the best things we as parents can do to prepare our children for the Real World is to teach them basic financial skills. A child who knows how to save is a child who has a jump-start on life. In a world that saturates children with media advertising for the latest toys and electronic gadgets it would seem neglectful not to teach these skills. Giving your child a deeper understanding of where money really comes from, reducing greed, instilling awareness, and teaching good work habits in children will go a long way to creating financially successful adults. Here are some basic suggestion for teaching your child the importance of money:

Start Early
The best way to start is when they’re young. Teach them about coins and notes. Show them how many coins equals one dollar, how many dollars equals a five-dollar note, and so on. Encorage your child to pay for things at the shop while you stand besdie them, they love this.

Being Responsible
While explaining about spending money, teach them about the household bills. The ones they’ll grasp the easiest are the ones they can see. The utility bills are a good example. While they’re brushing their teeth, teach them to turn the water off until they need it again. Explain how the water going down the drain is like money going down the drain. And, when leaving an empty room, teach them to turn the lights off. This sets up good habits when visiting other homes and for the future when they run a household themselves.

Teach the difference Between “Want” and “Need”
Children think they need everything they want. Teaching them the difference is an important step in helping them decide what to do with their money.  For example, a young child that wants a new truck but needs new sneakers, may be just as happy with a pair of sneakers with a truck on them.

Let them spend some money
Give your child the opportunity to spend some money. Take them to the store with you and help them to understand prices, how much they have to spend and what they can afford to buy. Children who start doing this young learn that they can't always have what they want there and then and have to wait until they have saved enough money. This may hopefully transfer over to adulthood and resist the urge to overspend or have a credit card.

Pocket Money
Set your child some age appropriate jobs that need to be carried out throughout the week. For young children they be be things like:
- packing up their toys
- helping to make their bed in the morning
- putting their shoes away
* As children get older naturally you can determine what jobs they are capable of carrying out independently

Teaching children from an early age about money can save you and them a lot of trouble in their later years. Remember that children, as adults, most appreciate those things that they’ve worked hard to get. You aren’t doing your children any favours by buying them everything they want. A little financial instruction can go a long way to helping your children become financially responsible adults.

Make Saving Fun
I love these Money Savvy Pigs. It is a patented four-slot piggy bank with separate chambers for Save, Spend, Donate and Invest. It comes with little stickers that allows your child the choice of how they want to use their saved money. For example, under Save, Master 3 has put a scooter as he would like a two-wheeler one. Under Donate, Master 5 has put a book as he has decided he would like to donate some money to the local library. This Pig is great as it teaches them sound money management techniques for life.

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