How to Teach Kids the Value of Money

children and financesMost Parents would agree that teaching their children the value of money is important yet according to a recent study, more are prepared to talk with their child about sex, drugs, and alcohol.  By following these simple strategies you can help your child develop money management skills that will last a lifetime.

Talk to your kids about money.  When you use a credit card explain to your child how credit cards work.  When your statement arrives in the mail take the time to sit down with your child and show them how long it will take to pay off the card if you only make the minimum payment.  Explain what happens if you forget to make your payment on time but also explain the benefits to your credit rating by making payments on-time.  It is important for your child to understand that credit cards have an important purpose but it also comes with a responsibility to use them wisely.

Include your children in monthly family budget meetings so they can begin to appreciate the resources needed to run a household.  Share what is appropriate for the age of your children and avoid discussing topics that may cause disagreement.

Explain how the ATM allows you to withdraw money that you earned from working hard.  Children need to understand that an ATM is a convenience and if not properly used, can result in fees and overspending.   Take your child shopping and explain prices in terms of their allowance.  When you purchase a toy or favorite food item for your child, show them the receipt and explain how many weeks worth of allowance it would take to purchase the item.

Setup a savings account for your child and have them make regular deposits with their own savings.  A great way to teach your child the value of money is by giving an allowance.   By giving your child an allowance in exchange for chores around the house, you will be helping to teach your child the value of money.  It is difficult for your child to understand the hard work necessary to provide a home and the material things so easily taken for granted.  You can provide incentive for your child to save by matching a percentage of every dollar of their allowance deposited in the bank.

 

What advice would you give when teaching a child the value of money?

Stay Connected with The Frugal Toad

Subscribe to our e-mail newsletter to receive updates.