How to Teach Your Children About Finances
It is so important to teach your children about finances. It will help them to be successful and productive adults. The sooner that you begin teaching them the better. In this article, we will go over different ways you can teach your children about money according to their age group. These are general ideas that you can tailor to fit your child’s needs and abilities.
At this age group, you can keep things simple. Teach them how to identify different money denominations. Now is also when you should begin to teach them about delayed gratification. They need to learn the ability to wait to get what they want. Teach your children that when you go to the store they do not always get to get something. You also can have them pay for your purchases, so they can understand that money is necessary to purchase things.
Additionally, you can help them set a goal of saving to purchase a small item. This way the goal can be met quickly so they are not discouraged but you are able to teach them if they want something they need to save up to buy it. You should also begin to teach them the differences between needs and wants.
From ages 6-10 you should teach your children how to make choices about how to spend money. Children need to learn that money is not unlimited, so they need to make wise choices. One way you can do this is by including them in your grocery shopping process. For example, ask questions like is this something we really need, can we get is for less somewhere else? You can also show them how choosing generic brands or buying in bulk can help to save money.
For a project, you can give them a set amount of money to buy a specific item, such as fruit, so they can begin to make choices based on a budget. You should also set up save, share, and spend jars. Have them allocate their allowance between the three jars. Help them set up a savings goal to purchase a specific item. Then they can keep track of how close they are to reaching that goal. This is setting them up with their first budget.
At this age group, you can begin to add on to the money lessons that you were teaching your children before. You can help them set long-term goals to purchase more expensive items. You can also give them a budget when purchasing school supplies. Then allow them to try to purchase that they need while staying within budget. During this age, you should also begin showing them how money works in the real world. Show them that probably does not go as far as they think. You can do this by showing them the percentages or exact amounts of your income that you spend on your bills. Lastly, you should show them the power of compound interest.
If you have not done so yet, by this age you should open a checking account for your child. Encourage them to earn their own money through things like babysitting and lawn mowing at first and then later a part-time job. This will help to teach them the value of hard work. When it comes time for them to start applying for colleges, have them research the different cost points between colleges, including pricing beyond tuition. Also, be open with them about how much you contribute towards their college fund and how much you can afford. Additionally, be sure to teach them how to fill out the Citrus Loan Applications, so that in the future if they want unsecured loans for their education or any personal reason, they would not have to rely on anyone.
This is the age to help your child understand how to properly use credit. Help them apply for their first credit card. Preferably one without an annual fee with a low-interest rate. Them tach them to only put amounts on the card that they can pay off at the end of the month. It is important that they understand how easy it is to fall into credit card debt and how hard it is to get out of it. The average American household has $7,084 in credit card debt. You want to help your child learn how to be responsible now, so they do not end up in the same boat.
You Can Teach Your Children About Finances
It is possible to teach your children about finances! It is important to remember that you cannot do it through a single conversation. You do it through countless conversations and activities throughout their lifetime. But the very best way you can teach your children about finances is through your example.
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