How to teach your kids about personal finance
Holidays are a great time to appreciate what you have and give to others. It’s also a time when most adults have a hard time budgeting when Christmas gift and vacation travel expenses add up, making this a great time to teach your kids about budgeting.
Tyler Martin, Founder and Certified Business Coach at ThinkTyler, said that giving “your child a certain amount of money to spend on gifts for others, with the caveat that they sit down with you to create a budget. Your child will learn the importance of making wise financial decisions, âaccording to GoBankingRates.
In this process, your children will learn – through trial and error – what to buy and what to leave behind.
âYoung children may have an easier time grasping this notion if the money is given to them in cash. Help them divide the money into piles so they can see how their money will be spent, âsaid Martin.
As an incentive, they can always do household chores to earn more money, which will teach them to value it.
Here are some tips to get you started.
Offer advice at the right time
It is important to remember that your child may not grasp intangible concepts if they are younger. If they’re old enough to understand, find ways to involve them in the planning, according to Rocket HQ. Parents.com said children ages 6 to 8 can be introduced to bank accounts and savings. There is nothing wrong with going into detail, although it may not be necessary to explain concepts like 401 (k) accounts.
Recommend using physical money
Carrying physical cash will help your child understand how to use it. If they make the decision to spend it all in one place, let them do it, because it’s also a great lesson to learn about budgeting and saving, according to MSN News. It doesn’t matter how much you give them in cash, even a little goes a long way. Remember that your children will be delighted to receive the gift.
When you start to budget for your Christmas shopping list and other holiday projects, involve your child in the process. Try to create a budget with your child, calculating the needs of each category. According to Rocket HQ, ask them who they would like to buy for, explaining that they can only spend a certain amount of money so that everyone can receive a gift. As mentioned earlier, if they are going over budget at some point, this can be a valuable lesson to learn.
Buy online safely
Since most people shop online these days, it’s important to teach your child how to avoid fraud and compare prices. âBecause so much of holiday shopping today – especially in a post-COVID economy – takes place online, you also need to teach your kids how to shop safely and avoid the threats of fraud. It’s good to have a budget and it’s important to learn how to compare prices, but if you lose all your money to hackers your Christmas will be wasted, âsaid Monica Eaton-Cardone, Co-Founder and COO of Chargebacks911, a FinTech. company, according to GoBankingRates.
Focus on giving
The holidays are a great time to show off the power to give. Encourage them to buy gifts that they can give to organizations with worthy causes. According to Rocket HQ, these experiences will help your child learn to be grateful for what he has while feeling good about the gifts he has made.