Kids who grow up money-savvy tend to
develop a healthy relationship with their finances as they get older. The
sooner they learn the value of money and how to be creative with saving, the
more they'll learn how to spend wisely. Teaching your kids entrepreneurial
skills and getting them into a lifelong habit of investing a portion of their
money will ensure they're financially astute. There are various ways to instill
this healthy attitude toward money.
Get Kids to Work for Their Allowance
Money is a good reward for effort, and working hard for money can make kids value every
cent. If kids are given handouts, they might grow up expecting handouts. They
don't need to graft hard for their allowance but should learn to trade extra
chores for cash. Whether it's doing the dishes, mowing the lawn, or helping to
unpack groceries, kids can establish a routine of working for money.
Encourage Kids to Save Toward Something Big
Instead of giving kids their
dream toy for their birthday, get them to save a portion of their allowance
until they have enough to buy it. This way, they will look after their prized
possession and realize the true value of the work that went into buying their
toy. Saving for something, and then buying it with their own money will make
kids feel independent. It also makes them look after things.
If it's an activity they're
interested in doing, like jet boat tours to Lake Mohave, they can save separately for this fund. Sometimes it's
good to create savings pockets for kids, where one pocket is for material items
and the other for entertainment.
Teach Them About Finances
When kids are old enough,
discuss the value of money, and how credit cards, loans, and banks work. Hand
them a bunch of coins, get them to count their money, and let them decide how
much to spend or save by opening a bank account in their name. A key point of discussion should be about only spending
what you have and living within your means.
Teach Kids to Say No
There is a difference between
being generous and careless. Kids shouldn't give their money away to friends
and should be taught how to make sensible decisions about loaning money. Teaching kidsto say
no without feeling guilty or pressured into spending money is a valuable
Help Kids Start Their Own Business
Business creativity and
entrepreneurship should be encouraged. Help kids identify business opportunities by getting them to think outside the box. Get them to
write down a list of things they love doing that others might not enjoy doing.
This can start the process of how to think like an entrepreneur.
Teach them that people pay for
services and help with the things they don't enjoy doing. Some examples include
washing cars, helping with electronics, and carrying things. Kids also need to
understand that finances are needed to start a business and how they should go
about raising capital.
They can use their savings or get friends and family to invest.
Raising Financially Literate Kids
A healthy relationship with
money starts when you're young, and all boils down to understanding finances
and having respect for money. The sooner these values are instilled in kids,
the better chance they have at financial freedom and success.