Teaching your kids about finance is invaluable, as it as it sets them up to make great money decisions when they’re older. Money is always a touchy subject, and is one of the main points of contention between married couples. Help your children avoid such problems via the following tips.
Talk About Where Money Comes From
Explain where money comes from–from working hard. It does not “grow on trees” as the old saying states. Discuss the fact that you only make a certain amount of money per month and that being mindful about how you spend it is very important.
Discuss The Concept of Choices
Discuss the fact that limited funds means making choices about how to spend money. Explain that when you decide to spend money on one thing, it often means you cannot spend it on something else. Talk about paying for necessities first, such as food, clothing, toiletries, etc. Money that’s leftover can be for “spending,” however it’s also important to save and invest.
Need Vs. Want
Continue with the “choices” conversation by explaining needs versus wants. For example, you may want to purchase an expensive hair conditioner, but you need to buy food for dinner. Talk about setting most of your money aside for necessities before using some of it for fun.
Start Your Kids On Allowances
Put your children on allowances. An allowance isn’t free money, it’s an opportunity to learn how to save. Let your children spend their allowances how they like. Doing so provides a valuable lesson on saving–if they save their money they can put it towards bigger purchases. If they spend it all at once they might not have money for something they really want.
Take Them Comparison Shopping
Take your kids with you to grocery and retail stores for comparison shopping lessons. Let them help you find the best deals while also comparing brand names with store brands. If the ingredients are the same and one is cheaper, ask your children which option is best to buy?