Ideally, kids should learn how to take care of their money when they’re still kids. If you have kids and you’re trying to teach them how to budget money, you should know that the budgeting lessons can start while they’re young. Here are five suggestions that will point you and your kids in the right financial direction.
1. Have a Savings Jar
Many kids get a piggy bank, but financial expert Dave Ramsey actually suggests that you forego the traditional piggy bank and get your kids a savings jar instead. Having a jar allows them to see how much money they’re accumulating. Each time they add money to their savings jar, teach them the value of each coin. Teach them also about equivalents, like ten pennies equals one dime.
2. Earning Money
When kids are younger, give them allowance. When they’re older, encourage them to get a job. Children will never get any sense of how budgeting works if they don’t have the earning part of the equation down.
3. Create a Wish List
Once kids have money, it’s time to teach them how to budget it so that they understand where it goes. One way to do this is to help your child create a wish list. If there’s a toy they want or an event, like a concert, that they want to attend, ask them to put it on their wish list. Teach them how to keep track of how much they have to save until they can afford to pay for their event or wished-for item. This will teach them to put thought behind each purchase, cherish the items they saved up for, and avoid impulse purchases.
4. Open a Savings Account
Many banks will allow kids to open a savings accounts, either on their own or with a parent as a cosigner. Teaching kids how to save money encourages them to forego debt and to learn to keep track of how much they have. A savings account can also teach them about interest, investing, and other important financial milestones.
5. Teach Them about Debt
Kids won’t have to worry as much about debt when they’re still living at home, but once they turn of age, it’s likely that they’ll start getting offers for credit cards. They’ll also be in a position to take out student loans. They need to learn about debt before these events occur. Talk to them frankly about your own efforts to stay out of debt and about how you create a budget so that you can stay out of debt.
Learning to take care of money can be a lifelong endeavor. When it comes to teaching your kids about budgeting and money, it’s better to start the lessons early. From savings jars to lessons about debt, any knowledge you impart to them about budgeting will only benefit them in the long run.