Youngsters catch onto the significance of money in life pretty quickly by watching us use it everyday, which means teaching kids about money can be relatively easy. The way to show your child the value of a buck is by teaching them the other ways a greenback is utilized.
Begin explaining to your kid how money works from a tender age. Items (or services) in life are given in return for money, and the price or worth of that item varies according to the seller. If you do not have enough money, you can not purchase the item, it's that simple. A follow-up to this is talking about saving money. A child with a couple of buck could go and buy candy (that'll be gone in 10 seconds) or a cheap toy (that will be broken in 10 minutes or completely forgotten about the next day).
Here are some tips for installing life-long healthy financial habits in your child:
Have A Savings Plan
One of the oldest strategies in the book - save 10% of everything you earn. Ten percent is a simple sum to learn; simply move the decimal point one space to the left.
The purpose for setting up this savings plan is to use for items your child is saving for long term such as a car or university fund. The remaining $0.90 of every dollar your child receives is used for the short term items they want to buy such as candy as mentioned above. The main principle for the savings plan is to teach your child self-discipline for long term savings.
Even though 10% doesn't seem like a lot, it adds up over time. This teaching is especially useful when they get their first job and are already in the practice of saving that ten percent for long-term use. You might also like to encourage your child to put a certain percentage aside for charitable giving, so your kids can also learn about this vital facet of managing money.
As your kid gets older...
When your kid is more grown up, take her or him to the bank with you and open up a savings account in their (and your) name. Once or twice a month, take your kid to the bank so they can deposit their money into their account.
Teach your child about Interest too and explain what a huge part it plays when using money, especially credit cards.
Although credit cards do have their advantages (if used right), kids need to realise that unless you can pay off that credit card debt inside the interest free period, they can actually be paying more for their acquired item. There are calculators on financial institution websites that can be used to show your child how much they would pay for an item if they continuously paid interest on their cards.
When children know how cash works they will (hopefully) be more inclined to use responsibility when earning money calls.
Begin explaining to your kid how money works from a tender age. Items (or services) in life are given in return for money, and the price or worth of that item varies according to the seller. If you do not have enough money, you can not purchase the item, it's that simple. A follow-up to this is talking about saving money. A child with a couple of buck could go and buy candy (that'll be gone in 10 seconds) or a cheap toy (that will be broken in 10 minutes or completely forgotten about the next day).
Here are some tips for installing life-long healthy financial habits in your child:
Have A Savings Plan
One of the oldest strategies in the book - save 10% of everything you earn. Ten percent is a simple sum to learn; simply move the decimal point one space to the left.
The purpose for setting up this savings plan is to use for items your child is saving for long term such as a car or university fund. The remaining $0.90 of every dollar your child receives is used for the short term items they want to buy such as candy as mentioned above. The main principle for the savings plan is to teach your child self-discipline for long term savings.
Even though 10% doesn't seem like a lot, it adds up over time. This teaching is especially useful when they get their first job and are already in the practice of saving that ten percent for long-term use. You might also like to encourage your child to put a certain percentage aside for charitable giving, so your kids can also learn about this vital facet of managing money.
As your kid gets older...
When your kid is more grown up, take her or him to the bank with you and open up a savings account in their (and your) name. Once or twice a month, take your kid to the bank so they can deposit their money into their account.
Teach your child about Interest too and explain what a huge part it plays when using money, especially credit cards.
Although credit cards do have their advantages (if used right), kids need to realise that unless you can pay off that credit card debt inside the interest free period, they can actually be paying more for their acquired item. There are calculators on financial institution websites that can be used to show your child how much they would pay for an item if they continuously paid interest on their cards.
When children know how cash works they will (hopefully) be more inclined to use responsibility when earning money calls.