Learning about money is tough. Teaching your children about financial matters is even harder! Our children have probably had some kind of financial transaction. Whether it’s pocket money for a small task or saving up and buying their own computer game, at some point in their late teens, they are going to get a job and start to feel the joy of an income. It’s at this point we need to get serious when it comes to teaching your kids about money.
Giving your children more involvement in household budgets might feel a little weird at first. The idea isn’t to throw them the bank accounts and ask them to make all the financial decisions! That would be a disaster. Instead, it is about letting them see the reality of adulthood. How much money comes in, and how much goes out, what you put by for savings and the reality of what those savings are spent on!
Run through all your bills and expenditures, and this includes any loans. You may encounter a few difficult questions such as “How do banks get away with charging this much?” or “How do title loans work?” but do your best to answer all questions that crop up. At some point in their lives, they will need to know this, and if you set them into the world with a little financial knowledge, they can make better decisions.
Teaching your children the critical balance of earning, spending and saving is vital. Their experience to this point has been pretty limited. You could set up a budget for them to start saving for a car. Run them through how much owning that car will cost from the purchase price to the running expenses. Then get them to write down their earnings and work out how much they need to put aside each month to buy their car. Then they need to figure out how much they need to set aside each month to pay for the vehicle, the gas, insurance and maintenance. Helping your teen set up his own budget is great for teaching your kids about money.
Some families charge working children a little rent. This might not be something you are comfortable with; however, it is good to get them into the habit of contributing. If you don’t want to use their money for household costs, without telling them, you could put it in a savings account and when they are eventually ready to leave home, let them know what you have been doing. This will give them a little nest egg and highlight how important saving money is while allowing them to feel some financial responsibility.
Kids thrive on real-world experience, and there are multiple ways you can give this to them at home. They might find it boring at first. But, once you get them going on a task, let them feel they have responsibility for something important, most children will enjoy the challenge even if you ask them to run through the family finances and see what could be saved for the family holiday of a lifetime. Make learning about money fun, and they’ll learn it quickly.
Make money fun, but make it matter while teaching your kids about money.
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