I have actually met many parents who are resistant to really teaching their kids about money. Why is that? Some don’t give allowances because they then lose control over what their kids get to buy. Okay, but… how can your kids learn?? Putting your head in the sand about money won’t help your problems or teach your kids. Children need to learn good money management from their parents.
Some basic financial concepts taught as early as the preschool years are short-term vs. long-term goals, delayed gratification, value of money and the power of saving. While these sound complicated; they are actually rather simple.
Starting with a small allowance for a preschooler, you can do a simple chart where you list short and long-term goals. An example could be a short-term goal to buy a new doll and a long-term goal could be a new scooter. Go shopping, look at the prices and chart their progress toward their goals. Make sure their allowance is enough to reach a short-term goal relatively quickly (three to six weeks). Apply this same concept to older kids – but they can even become more involved.
This in itself will teach delayed gratification and the power of saving. Take it even further and start a price book. This will help children start to appreciate the value of money through tracking what things cost. It can also be helpful to discuss how to earn money too. By rewarding your kids with money for special chores, they also build the value of money through hard work.
As your kids grow up, start to demonstrate the power of saving through investing. Open up a savings account and discuss interest rates. Take a field trip to the bank and have your child talk with the representative about different saving and investing options.
By collaborating with your children to teach them basic money skills, you are arming them with the tools to be successful in life.
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*Getting Your Kids Involved in Being Frugal