06 Jun Teach Your Kids the Value of Money This Summer
The kids are out of school for summer and you are wondering what to do with them. Why not teach them a little bit about the value of money? With 3 months of no school, it’s a great time to start teaching your kids how to be financially savvy. The earlier they learn, the better off they’ll be.
1. Earning Their Own Money
The best place to start is by giving them simple chores around the house so that they can earn their own money. Give them a couple of dollars every time they vacuum or empty the dishwasher or help you make dinner. Little things like that add up and they will love earning money of their own.
2. Spending Their Own Money
The next step would be to allow them to make some purchases of their own. This will give them a sense of freedom but it will also teach them that they cannot spend more money than they have. If they’ve earned $15, then they obviously can’t spend $20. That’s an extremely important lesson for them to learn.
3. Wants vs. Needs
Once you allow your kids to make some purchases on their own, it is important to teach them the difference between wants and needs. Now that they have their own money, they are going to want to spend it but they must know that they do not need that lego toy, they want it. They need a new toothbrush. If they know the difference between a want and a need while they are young, it will help them to make better spending decisions in their future.
4. Saving Your Money
You may have already opened up a savings account for your kids, but if you haven’t, take the kids to the bank with you and open up a savings account for them. This is a great time to explain the importance of savings and how saving their money will allow it to increase in the future.
Depending on how old your children are, this might be enough for them to start. However, if they are older they can probably handle the more advanced stuff.
You can move on from savings accounts to talking credit and interest rates. This is going to be a lot of information for them, so let’s start simple.
Explain the concept of credit to them. Let them know that with a credit card, you charge your account by “borrowing” someone else’s money for the original purchase. Stress the part that you will have to pay back the balance each month or else it will be more than you spent originally because it has accrued interest. This is the perfect transition into interest.
You have to explain to them that interest can both benefit them and harm them. When they put their money in a savings account and accrue compound interest, that means that their money is growing and they have more than what they started with. But, when they take out a loan for a car or for college and they accrue interest, that means that they have to pay back more than they borrowed.
Teaching your children the value of money is incredibly important for any parent to do and the earlier you start, the better off your kids will be. So, don’t waste any more time. Get started today!