Sadly, many kids come into the adult world with serious misconceptions about money. In many cases, this leads to immediate – and sometimes serious – financial troubles that can follow them around for years to come. The earlier you can start teaching your kids about money the better. These lessons can carry them through to success as a financially-independent adult.
Establish a Budget System. As soon as your children are old enough to start receiving an allowance, they are old enough to start learning how to budget. In one of Dave Ramsey’s books he talks about envelope systems and setting up a designated system for spending, saving and giving. These are great lessons for kids. I highly recommend Financial Peace Junior.
Take Your Kids Shopping…with their own money. Let’s face it. It is a totally different situation when you are spending someone else’s money as opposed to spending your own. Take them shopping with their money and their shopping list. Discuss possible purchases. If they make poor choices or attempt to overspend, let them. These are such important money lessons. After all, no one is there at the end of the month to bail you out if you mismanage your monthly budget. This is a lesson best learned young.
Talk About Advertising. Retailers are trying to lure kids in every opportunity they can get. Start teaching your kids about their tricky tactics. PBS Kids has some great free teacher resources available called Don’t Buy It! Get Media Smart.
A Loan is a Loan, even if it is your child. Charge them interest on money they borrow to instill the power of debt. One of the biggest financial pitfalls for young adults is credit cards. Many kids do not understand the impact interest can make on a loan. This is one lesson they will be grateful for down the road.
Get Them Involved in family finance. There are numerous opportunities to get your kids involved in household budgeting. Should we take a one-week trip to Disneyland or buy a backyard pool that will provide years of enjoyment?
Use Games like Earn It, Learn It to teach younger kids about money. This game teaches about career choices, income and more.
Teaching kids about money does not need to be a painstaking activity. It is often simply a matter of being more open about the choices and potential pitfalls that you face financially every day.