Managing money is an essential skill that all children should learn. It is a skill that many adults lack, and the proper management of money can help children to learn the financial responsibility that is necessary to be a wise consumer in the future.
Start a Savings Account
When your child is old enough to understand, take the child to the bank and open a savings account. Explain that the purpose of this account is to allow the child to save money for when it is needed in the future. Once the statement accounts come in, show the child how leaving the money in the account actually made them more money with the interest.
Portion the Funds
When children get extra money, you should try to instill in them to put some of the money away into the savings account. This is a difficult thing to do, but if they understand the savings account process, children will be more likely to put a small portion of the money away.
Use a Pre-Paid Debit Card
Take your child to the store and purchase a free pre-paid debit card. Once the card is purchased, your child will be responsible for the spending. This is a great way for children to understand that credit cards and debit cards use money just like cash. They also teach children to have the money before they spend it.
Save Your Change
It is important for children to see that you are saving money every day, and this can be done by having a coin collection container in your home. Be certain to have everyone put their change in the container whenever possible. Once the container is full, use the funds for some family fun.
Make a Chore Chart
Make a list of chores that your child can perform. Then, write how much money each chore is worth. For example, cleaning the bedroom might be worth 25 cents. This demonstrates to children how the working world works. Also, take out a portion of that amount for the savings account or coin collection container. We adults call this portion…taxes.
Many children believe that you can get anything with a credit card without having to pay cash, and this can create a vicious spending habit if not curbed early and properly. The same can be said about using personal checks. These strategies will teach children to save, be thrifty, and work for their money. Understanding the value of money makes children more conscious of their spending.