Personal Finance For Kids

Teaching your kids about money is one of the key responsibilities of a parent.

Creating good habits now will help them understand money and successfully manage “adult” financial issues for real. It’s never too early to get started, so read on to find out what you can do as a parent.

Start with Toys

 

First of all, you should find toys for your kids that will get them used to the concept of money and how it is used. Find toys that involve play, but also show how much is used and spent- a cash register, for example. This is something kids can interact with at an early age, so you can get them started on the right foot.

 

Piggy Banks?

 

Aside from the toys we mentioned above, you also need to find your child an adorable DIY piggy bank. This is when your child begins the transition from having pretend money to real money that they keep in their piggy bank. It’s a small item, but it might turn out to be one of the most important things that you ever give to your child when they’re young.

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Pocket Money

 

When they’re old enough to handle the responsibility, you should give your kids the chance to have some pocket money of their own. This is important, because they will learn about the responsibility that comes with having money, how to save it and what happens when you spend it.

Kids will feel good about having this new responsibility to manage.

When They Run Out

 

If your kids run out of cash after you’ve already given them pocket money, you shouldn’t hesitate to hold firm and wait until they’re next given pocket money. Don’t cave in to their demands for money, because that sends exactly the wrong message about how money should be managed.

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It can be difficult to hold strong and say no, but sometimes you need to say it as a parent.

Change is hard

The reason that people don’t diet, don’t exercise, and don’t resolve bad personal relationships is that change is hard. As a result, we don’t really, truly change and grow unless we’re in real pain. When we’re at that point, the pain of change is less severe than that pain of not changing.

Kids need to understand this key human trait.

Gratification?

Some decisions are relatively small:

• Dropping a subscription music service and just listening to the free version (Pandora, for example).
• Making coffee at home two days a week, which means that you stop by Starbucks less often.
• Buying afew more generic products when you go to the grocery store and Target. (I’m not going generic on salad dressing, however).

Since these are smaller decisions, the amount of gratification you’re delaying is small. You don’t mind listening the commercials on Pandora (I certainly don’t- I just turned down the sound), and the coffee at home isn’t bad.

Other decisions are much bigger. StudySoup wrote this great article on the average amount of money a college student saves by having a roommate. The average savings over four years is over $15,000. Now, having a roommate is a big sacrifice, because you lose a fair amount of privacy. If privacy is really important to you, it’s a true delay of gratification (until you graduate, get a job and can afford to live alone).

OK- so what do I get out of all this delayed gratification?

You build wealth- which can give you peace of mind. Another key concept that every parent needs to teach a child.

Cause and Effect

Over time, kids can learn about the importance of saving money and what happens when they don’t save it correctly. It’ll be an important lesson for them as they get older, because they’ll understand that spending money will have consequences. It’s a simple lesson in cause and effect, but it’s also a very valuable one.

Teaching your kids how to manage their money properly will help them to eventually get better at it when they’re older. It’s all about setting the right habits in motion from a young age, so that they can become financially capable adults later in life.

So, get started on all this today!

This post is for educational purposes only.

Ken Boyd

Author: Cost Accounting for Dummies, Accounting All-In-One for Dummies, The CPA Exam for Dummies and 1,001 Accounting Questions for Dummies

Co-Founder: accountinged.com

(email) ken@stltest.net

(website and blog) https://www.accountingaccidentally.com/

(you tube channel) kenboydstl

 

Image: Bullseye, Jeff Turner CC by 2.0