Credit cards and expenses

Many children watch their parents live on credit cards. When there’s something new that they want, or an upcoming obligation, they see their parents reach for the card and take care of it, almost like it’s magic. Relying on credit cards can hardly set a good example for managing money or responsible financial planning. Here are some tips on finding ways to teach kids about money.

Teaching the value of money

Schools teach reading, writing and math, but rarely do they cover everyday tasks such as paying bills, understanding budgets, or working with interest. It’s up to parents to do the educating of children in this area. Here are some steps for you if you’re trying to teach your child about money:

1. Start teaching children early about money. The days where children can be completely kept in the dark about finances are gone. In today’s tough times, children need to know that money has to be managed. Some ways to accomplish this include teaching kids about how to save up their cash. Let them see their dollars accumulating in a box or drawer. When it’s full enough, let them take it to the bank and deposit it themselves. Visual learning is a great way to get a message across. If they see their money growing, they can get an idea of how it will work in the future.
2. Teaching children where money derives from and correlation between work and wages. Normally children believe that money “comes from mommy and daddy.” When mom and dad are out of cash, normally credit cards take care of purchases. Each and every child should be taught the principle that money comes from work. And then how money is used for purchases. Then how we use things and repeat the cycle. Paying children for tasks that are above the ordinary, like cleaning out the attic or the garage, can help them to see value in labor.
3. Consider offering your children an allowance. Experts debate how effective allowances and pay for chores are. Children could be paid for large tasks that help out around the house, but don’t pay them for what they are supposed to be doing anyway. Responsibilities or daily/weekly chores could include keeping their rooms clean, sweeping, mopping, cleaning up toys and assisting with laundry. On the other hand, if the family is having a garage sale, they could pay the child for keeping everything lined up neatly or organizing goods to be sold.
4. Make the savings plan interesting. Depending on your child’s age, help them to engage in saving money. For a younger child it could mean decorating a piggy bank. For an older child it may mean helping them save for a bicycle or larger item.

The importance of finances

With the recession hitting hard, it’s more important than ever to understand how finances work. Children need instruction from parents on the acquisition, saving, budgeting of money, and how credit cards and loans work, and how to manage it all. For their futures to be secure, they need everyday learning presented at an understandable level. Educating children today makes for better prepared and responsible adults tomorrow.

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