I’m definitely not a pro on this subject but here are some of the tricks that I have learned over the years from various people:
- Start with you – If you don’t understand money, you can’t teach your child. Learn about how to keep a budget and staying within those limits. Learn about cost saving things. Learn about investing. Learn about savings. Go to the experts and find out so that you can save yourself money as well.
- Teach them by example – Now I’m not telling you to explain all your bills. I wouldn’t want to do that and neither I’m sure would you. But I do keep a calendar that shows when a bill is going out or is due. They see me keeping an actual system they know that you are doing it. Explain that accidents do happen and how to pick up from it. Or when they want something special and you have a bill, show them the bill on the calendar. This, also, helps to keep you accountable for your finances.
- Set an allowance up - Start your children on allowance early. Now this doesn't mean that you just give them money every week. They need to earn. By earning the money, they feel like they are accomplishing something. A lot of people do the allowance by age such as if you have a 7 year old, you might give her $7.00. That is a dollar per age. If that’s too steep, just lower it down. But always do it so that it’s equal across the board with your kids. Now remember you are not just going to hand this money out for nothing, have them do chores around the house like doing the dishes, cleaning their rooms, etc. Note: I am not saying that you can never splurge for them.
- Open up a savings account for them – Take them to the bank to open up a savings account. Explain how important it is to put money into their account. Now the trick here and yes you will probably shake your head at me is to let them control the account. Yes when they first have money they will spend it frivolous stuff but what they will learn as they grow if you don’t give them more money, is that they have to save to get what they want. Teach them how their money can grow in the bank.
- Talk about the prices of things – Talk to them about how much something cost. Look at what they want to get and how to go about getting something. If they want the newest game boy, take them to the store and see how much it is. Then talk with them about how much they have to say in order to get one. Something on the lines of: “Ok that costs $90; you need to keep your allowance for 6 months to buy that.” Don’t fall back on I’ll just buy it for you. They won’t learn about saving to get something.
So how do you help your child to learn about money?