As children get older, they tend to become more and more money conscious, and it is very important to teach them to save, spend smart and earn small jobs. According to Eric Tyson, author of Personal Finance for Dummies, current economic problems provide an opportunity to educate our children about managing their finances. If you're feeling guilty that you can't buy your child that video game console he desperately craves for Christmas, or if you're asking him to choose between playing basketball or taking karate lessons, this writer, Eric Tyson, has something to tell you: don't. to do it. In fact, says the author, this is the perfect time to give your kids some valuable lessons on finance and teach them that budget management is what makes the world go round.
Steps
Step 1. Show the reality to your children
"Children are surprisingly aware of what's going on in the world," says Tyson. "And if they don't know that times are a little tough and that mum and dad have to pay attention to their expenses, it's time to tell them. Protecting children from financial reality doesn't do them any favors." A good understanding of managing one's finances is one of the most valuable life skills a person can possess. While previous generations may have been raised with the constant admonition that "money doesn't grow on trees!", Too many parents today are neglecting this lesson. The time has come for a change, and the economic crisis we are in today provides a great incentive.
Step 2. Tell the children the truth
Children are perceptive. If you've been acting tense and anxious lately, they'll surely have noticed. Instead of letting them wonder why Dad and Mom are working so hard lately or talking about money, explain to them (in a way they can understand) what is happening to family finances. This could mean explaining why you have given up on the holidays, why there will be fewer toys under the Christmas tree than usual, and so on.
Step 3. Tell the children how much things cost
Some parents are surprised to find that their children don't understand the price of things very well, because they have always protected them from this reality. A concrete way to open their eyes is to accompany them on a "monetary visit" inside the house. For example, children may not understand that hot water costs more than cold water, or that raising the level of heating will increase the cost of bills. This exercise will teach them to economize and help their families save money. You can also gather all the accounts for the month and show them the amount of each. Show them what the cost of living for the family is and reiterate in which areas they can contribute to reducing expenses.
Step 4. Giving gifts
Parents like to be generous by giving money to their children, but you still need to make sure they learn the concept of responsibility. Teach them the importance of not overspending. You shouldn't dictate to them how every euro should be spent, but ask them every now and then how they spent their pocket money, so that they learn to keep track of their expenses. Encourage the children to save so they can buy something they would like to have. Let's say your 12-year-old child wants a new bicycle or watch. Make an agreement with him: when he has set aside a part of the necessary money, you will contribute with the rest. Children will use money more responsibly when they know how much effort it takes to get it. You can encourage your teen to take on small jobs in coffee shops, bakeries, or restaurants to earn some money during the holidays.
Step 5. Understand that children learn from what they see
It might seem commonplace, but you, mom and dad, are your children's most important teachers. When you spend large amounts of money with your credit card, take out exorbitant mortgages or car loans and can't save anything, this situation becomes the norm for your children. If your example is unhealthy financial habits, you cannot realistically expect your children to "do as I say, not as I behave".
Step 6. "Deprogram" your children
Children are constantly bombarded with information about expensive things, whether it's the luxury sports car they like, the clothing of their favorite athlete or actor, or the many hints of opulence in the 40,000 advertisements that American Academy of Pediatrics ("American Association of Pediatrics") estimates that they see US children every year. What they are not bombarded with is knowledge of how to effectively manage money. Although schools are gradually incorporating money issues into their curricula, the broader concepts of personal finance management are still not taught. As scary as it may be, some schools rely on free "educational" materials provided by organizations like VISA and MasterCard!
Step 7. Give your children pocket money
Pocket money is a great educational tool. To find ways to help your kids earn pocket money, instead of just handing it to them, you don't need to break child labor laws. A well-implemented program can replicate many of the money issues that adults face every day. By recognizing the need to earn and learning how to spend, save and invest pocket money responsibly and intelligently, children can acquire a solid financial foundation from an early age.
Step 8. Get them to start saving and investing early
It's never too early to start saving, and the sooner you can convey the importance of saving to your children, the better. After they start earning pocket money, get your kids to save a significant chunk (up to half) for long-term goals, such as college (but be careful to pay the money on your parents' behalf. children, because in this way you could damage the financial aid offered by the university). Tyson recommends that children save about a third of their weekly allowance. As they accumulate more and more savings over time, you can introduce them to the idea of investing it.
Step 9. Make your children less exposed to advertising
The most important step in this direction is to drastically reduce the time spent watching TV. When the children are in front of the TV, have them watch prerecorded material. Smaller ones, in particular, show DVDs and Blu-Rays, while older ones can easily avoid advertisements by using digital video recorders (DVRs). But, when an ad manages to sneak up on your kids, causing them to come begging you, face it. Explain to them that a frivolous urge to spend is never a good thing, but it is especially harmful when there is little money available.
Step 10. Find fun ways to teach children to adopt good habits towards money
When you educate them on personal finance management, you will likely find yourself facing a very tough battle. That's why it's important to find fun ways to teach them this lesson. For younger children, Tyson recommends age-appropriate books, such as Mom, Will You Buy Me? (Berenstain Bears Get the Gimmies, by Stan and Jan Berenstain). For children in the final years of elementary school, Quest for the Pillars of Wealth, by J. J. Pritchard, is a book that teaches the main concepts of personal finance management through an engaging adventure story. You could also get them to subscribe to the American magazine Zillions, published by the same editors as Consumer Reports, which talks about money and features reviews of consumer products and services. You could also play the Monopoly and Life board games, to educate your children on the use of money.
Step 11. Teach children to shop smart
Shopping with the whole family will likely be the first encounters your children will have with spending money. They will see you making decisions based on family needs, perhaps seeing you occasionally use a discount coupon, and observe how you pay. These releases are a great way to teach them about money, product value research, and price comparison.
Step 12. Show them the right and wrong ways to use credit and prepaid cards
These plastic cards that you keep in your wallet offer a convenient way to shop in stores, over the phone and on the internet. Unfortunately, credit cards are also tempted to overspend and carry over debt from month to month. Teach your children the difference between credit cards and prepaid cards, explaining that the latter are linked to your checking account and prevent you from going overboard, as opposed to what a credit card allows. Make using a credit card the exception, not the rule.
Step 13. Encourage older kids to get jobs
Pocket money doesn't have to be the only way your kids make money. Your child's first encounter with the world of work can start with something as simple as a lemonade stand. Depending on their age, they may be doing some chores in a neighbor's backyard or babysitting. The fact that we are in an economic downturn makes it all the more appropriate that older kids help out with a part-time job, especially to finance unnecessary expenses like DVDs or trendy clothes.
Advice
- Partially exposing children to various advertisements (print or television) could adequately prepare them to live in our consumer culture. This exhibition, when accompanied by an adult or mentor instructing them on the purpose of advertising and ways to overcome the disappointment of living on budget, can prepare children for a life of ad bombardment.
- By reducing expenses, the time available to us increases. When the flow of money slows or stops, we need to be more creative and involved with each other, and we need to team up with each other to do more together. This is a positive result, something to be grateful for.
