Jan Udlock 0000-00-00 00:00:00
When you were growing up, your parents had more opportunities to teach you about savings and cash than you do with your children. Since most transactions nowadays are electronic, your child doesn’t get many opportunities to see actual cash. “Therefore, we need to weave money discussions into our everyday conversations with them, and make them as concrete as possible,” says Michele Clark, certified financial planner, Clark Hourly Financial Planning, LLC. Toddlers – Since toddlers love to play imaginary games, set up a simple home, store, work and bank scenario. You can show your child that you earn money when you go to work. You and your toddler can then pretend to buy food at the store and pay for your purchases. Toddlers don’t have the concept of exact price, but you can have fun together while learning. Toy cash registers are an added bonus and often the size of the money is larger for their small hands. You can introduce your child to savings with a piggy bank for small amounts. Better yet, open a real savings account at a local bank or at a credit union, so your child can go with you to deposit their money. Bring photo identification, your child’s social security number and an initial deposit (ranging from $50 to $100) with you to start the account. A monthly contribution can be set up to automatically deduct from your paycheque or you can go together to deposit their birthday cheques into their own account. “It is a good idea for preschoolers to have an opportunity to start making decisions about how to spend small amounts of money,” says Clark. Elementary-age kids – As your child starts school, you want to teach your children financial concepts and money skills to enhance their lives and help them make wise choices for their future. Delayed gratification – Media inundates our families with the need for the newest and greatest widget. Kids see cool new toys and clothes on television as well as at school. Elementary-age is the perfect time to talk with your kids about the concept of delayed gratification. “Helping your kids learn how to say no will not only help them with everyday finances, but will benefit them in other areas of self-control in their life,” says Kevin Gallegos, VP of Freedom Debt Relief, LLC. Your family can actually have fun finding ways to be more cost effective in their food budget or entertainment. You may decide to hold off going out to a fast food restaurant on a weekly basis so your family can have more spending money on a summer vacation. You can review the local grocery store circular and discuss sales prices and cost per unit with your child. Take a calculator to the store with you and show them that buying the larger quantity can be cheaper most of the time. Talk about how buying in bulk can be helpful but is not always a good idea if the item is perishable and your family can’t use it up before it spoils. Ask questions – Often as parents, we want to overly help our kids with decision-making. You want to protect your child from making a mistake especially when it comes to the subject of money. “However, resist the urge to tell them what to do. Instead, ask them questions,” says Clark. Here are some questions that you can offer your child: “Why do you want to buy that? How many times do you think you will play with it? How will you feel if it breaks or you lose it? If you spend your money to buy this toy, your money will be gone and you can’t get it back. What do you think about that?” Budgeting – Many parents are hesitant to involve their kids in the family budget but kids actually benefit from participating in setting family goals. “This way, kids can understand the limitations the family faces in a realistic way while getting to participate,” says Gallegos. One way to help kids learn smart spending habits is to start using envelopes, boxes or jars to start categorizing their money and savings. Parents can help kids set up three savings accounts including savings for long-term, short-term and an account for charitable contributions. “Allow them to make some spending decisions while young, so they can learn from their mistakes while the effects are harmless,” says Gallegos. Often, charts or a poster can be effective for kids to save for a certain goal. Discussing with your kids the difference between wants and needs helps your children to learn to wait and not grab at the latest and greatest toy, game or DVD. Model giving – Your children learn best when they see your examples of giving to the less-fortunate, church or non-profit charities. “Discuss with your child why you give to non-profits and how you determine how much to give,” says Steven B. Smith, Money4Life Center. Have your child help you go through your closet and pull out clothes to give away. Giving our time is another way to give, too. Your child can work right along with you as you volunteer at a local library or food bank. Talking about money with your child is a continual process and your money game plan can grow if needed as your child grows. Let your child learn and have fun while you are guiding them to healthy financial choices. Jan is a freelance writer and mom of five. She blogs at IMP3RfeCt Mom at janudlock.com/blog/.
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