Educating your child on finances can start at any age. It is very important for them to grow up with knowledge of when to save and when to spend.
Guest contributor Jacqui from Single Parent Retreat shares some tips for teaching children about finances.
My daughter is 10 years old. I take her to the bank to deposit money into her savings account and she handles everything. I show her how to fill out the deposit slip, she stands in line, and when it is her turn, she gives the teller her money and says that she wants to make a deposit. If we both have deposits, I will stand in line while she does her business with the teller first. I only come in if she has a question. She has been doing this on her own since she was six years old.
Tips for teaching kids about finances:
- Go over your child’s bank statements with them. Show them how much interest they accrued. Show them where the deposit is made and how it increased their balance. If you don’t let them take money out of the account right away, go over what happens when they do make a withdrawal.
- Discuss what the end result of the bank account is for. Is it fun money later in life, such as a car when they are of age, or just to hang out with their friends when they are teenagers? If you have multiple accounts, make sure to go over each one so they understand what that money is for. I set my daughter up with a savings account so that when she is older and wants to hang out with her friends that is money she will have. Her father and I also set up a savings account that is specifically for college.
- When they have allowances, make sure to let them spend a little now, save a little for later. If they don’t see instant gratification now, they are going to lose all interest in saving money for later and want to spend their money now. Kids, like adults, learn the “all work, no play” phrase and want no part of it. If they get money for Christmas and/or Birthdays, encourage them to put at least 15% away in savings. They can spend the rest on what they want. This can be either saving for a big ticket item such as an iPod, or a gaming system, or even a vacation that they want to take money with them on, or spending it right then and there on things they didn’t get as gifts and really wanted.
- Let them make mistakes.We all do as it is human nature. Let them work for their money. Summer jobs cutting lawns, walking dogs, getting mail or shoveling sidewalks. This would teach them about the business side of what you have to do to earn money. Money doesn’t come free! Let’s not teach them that it does.
What have you done in your family to teach your kids about money?
Written by Jacqui Stewart, a single mom to one girl, and the blogger at Single Parent Retreat. Jacqui loves sharing information not only on parenting, but products that she has found and loves. When she isn’t working her full-time job, she is working on freelance assignments.