In the U.S, parents give their kids around $30 a week.
While handing out an allowance is a great introduction to money, it’s important children become financially literate as it’s a lifelong skill. If you’re not sure how to teach your little ones about general finance, you’ve come to the right place.
Here are five methods to help you.
- Use a Jar
Your little ones may not be old enough to learn investing strategies, but they should understand how to save. To teach kindergarteners the money basics, get a clear jar so they can watch their money grow.
Start slow with a dollar and then add a quarter so they can watch the jar fill up over time. Explain the process and emphasize how great it is to sit on your money and watch it grow.
- Give Commissions and Not Allowances
Get your children on the right financial path by giving out commissions and not allowances. Only give them money once they’ve done chores around the house like taking out the trash or mowing the lawn. The goal is to teach your little ones that money is earned and not just doled out.
- Set Up a Bank Account
A fantastic way to teach kids about money is by giving them the responsibility for their bank account. When your child is a teenager, help them set up a bank account, so they learn how to manage their own money.
If interested, encourage your kid to start a saving plan for college by funneling a portion of their summer job earnings into a separate account. You should also tell them the drawbacks of student loans and how there are alternatives like attending a community college or applying for scholarships.
- Introduce Tracking Their Spending
To guarantee a good financial future, show your child how to track their spending. This will show them where they’re spending most of their money so they can adjust their spending habits.
It’s also important to show kids the risk of credit cards. Tell your children why falling into debt can be terrible for their credit rating and mental health, so they find a better alternative.
- Explain Needs vs. Wants
Show your children the difference between wanting a designer jacket to needing to pay for rent. A change in mindset will help them realize it’s better to spend money on important goals rather than on material things.
You should also teach them about insurance and how it can save their lives and assets if an accident occurs.
That’s How to Teach Your Kids About General Finance
Now you know how to introduce general finance to your children, so they make better decisions in the future.
Start by giving your kids a clear jar or bank account so they can watch their savings grow, explain the difference between wanting and needing something, and teach them to track their spending, so they’re set for life. Good luck!
Did you find this article helpful? Great! Then check out our other Finance-related posts.
