Many parents wonder about the best approach to teach their children about money. In order to take advantage of teachable moments, the best way to start money-essential lessons is to teach your children at an early age how to keep track of their income and expenses.
Teaching your children to be fiscally responsible helps them to be financially savvy in budgeting, planning, saving and spending. It’s never too early or too late to teach your children about economics. And the best way to teach your children about the value of money is to make it a fun and engaging exercise.
Teaching your children about saving, spending, giving
One effective exercise to teach your kids about the value of money (as made popular by financial expert Dave Ramsey) is to create three jars and label them “saving,” “spending” and “giving.” When your child receives money for good behavior or earns money for chores, the money can be divided equally among the jars. Utilize the spending-money jar for buying smaller items. The giving-money jar should be set aside for charity or to buy something for someone else. The savings money jar should be used to purchase more expensive items. You can find DIY sites that show you, step-by-step, how to create these money jars. You can even use old painted tin cans to get the project started.
When should you start teaching your children about the value of money?
Financial experts say that children ages 5 to 13 should be taught to spend wisely. Why? Because this is when a child develops the cognitive skills necessary to understand basic monetary concepts like identifying coins, counting change, and matching small amounts of money to items they want to buy. A good way to start is by explaining to your children the fundamentals of finances, such as why you shop at discounted stores for particular items like notebooks, pens, kitchenware. Another lesson is why buying in bulk gets you a cheaper per-item price. Or why you need to pay for merchandise before you take it out of the store., etc.
Help your children keep track of their income and expenses
Another effective exercise to teach your children about the value of money is to keep track of their income and expenses in a fun way. One suggestion is to create a simple worksheet and write down each time your child receives their allowance and when your child takes money out to spend so that every month your child can keep track of their activity.
Appropriate resources online
If further help is needed on this subject, there are many websites that provide financial education, financial games, as well as financial literacy information. Websites such as www.threejars.com, www.bizkids.com, and www.kids.usa.gov are sites that are very useful in helping your kids learn more about the value of money.
Don’t wait to teach your children to be financially responsible. If you are worried about your children’s financial future and need financial assistance in helping your children make smart financial decisions, give my office a call today.
Ebony Hazeleger is the owner and creator of Home Plan Advisors, which specializes in helping families become debt-free, maximize savings for college expenses and retirement, and establish emergency funds while minimizing risk and income taxes based on her smart money management system. For more information, call (866) 248-1871 or visit www.homeplanadvisors.com.