As a parent you want the best for your child. You want them to succeed in their endeavors and you want them to appreciate the things that they have and understand the value of money and not simply expect to get things. As a parent it is sometimes hard to find ways to teach your child about money, but beyond this, also talking about complex issues such as: life insurance, how much life insurance you need, the difference between universal and term life insurance, annuities versus other saving models and so much more.
I have found over the years that it is not always easy to teach your child about money, it takes time, patience and much more. I also have found that what works for one child may be a complete flop with the other. That being said, lately my daughter has been asking for a lot. She always seems to have something that she needs. While you and I know that these usually are wants and not needs, as a parent I have to redirect and work with her to see and understand this for herself so that she can make good decisions for her financial future.
Below are my top five ways that you can teach your child about money and its’ value!
- Let them earn the things that they want
Growing up myself, I can say that I saved, especially when I got into my teen years. My parents made it very clear that if there was something that I really wanted that I could work to make the money and get it for myself, and I think that my wife and I are working to do instill this in our own daughters too.
- Help them understand the importance of giving to others
However, it also is important for us to instill in them the importance of giving to others too. Whether that means providing financial or other gifts to local food banks, teachers, or other people in need or volunteering their time, it all goes back to giving away something of themselves. J-Mom and I are very passionate about this and we try to lead by example to our girls, showing them what we do.
- Saving versus spending.
Explain and demonstrate the concept of earning interest income on savings. Consider paying interest on money children save at home; children can help calculate the interest and see how fast money accumulates through the power of compound interest. Some parents even offer to match what children save on their own.
- Have your child open a savings account at a local credit union or bank
Allowing them to start early and see how saving money can lead to greater wealth can be an amazing tool to help them to be successful in later years. I have fallen into the trap in trying to make them keep the money in their account. I would encourage you to reconsider this and to not refuse them when they want to withdraw a portion of their savings for a purchase as this can backfire and could cause them from wanting to save at all. Some parents will consider things like introducing children to U.S. savings bonds. Bonds are still a good value, costing one-half their face value and earning interest that in some instances will be tax-free if used for a college education. Perhaps more importantly, when given as a gift, bonds will not be spent immediately, reinforcing saving and goal-setting lessons.
- Have regular family discussions about finances.
Start early and help kids to understand many topics and be money smart. Some of the topics that you could cover could include areas such as: the difference between cash, checks, and credit cards; wise spending habits; how to avoid the use of credit; and the advantages of saving and investment growth. With teenagers, it’s also useful to discuss what’s happening with the national and local economies, how to economize at home, and alternatives to spending money. All of this information will be important as they take on more responsibility for their own financial well-being.
These are only a few tips for how to teach your child the value of money. This post could probably have included hundreds of tips and I just touched the tip of the iceberg with my top five. That being said, I found that there are amazing resources available online to help you with learning about this topic, information about life insurance quotes, the amount of life insurance your need, college preparation and so much more. Below are a few good posts that I found that I wanted to share with you!
- 3 Lessons on Saving Money All Parents Can Teach Their Children – http://cbi.as/7to5
- Teaching Your Children About Money – http://cbi.as/7to7
- Financial Management 101: Teaching Kids How to Budget – http://cbi.as/7to9Five
- Ways Parents Can Become Better Providers – http://cbi.as/7tob
Also in exploring this topic I found another great site that I thought I would share as it covers a little bit of everything. The site has a learning library that is very complete. Check it out here: http://cbi.as/ec5d5
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Lori Pace says
Thank you so much for this informative post! I love the tips and will use some of them with my kids! #client