For Women & Co. by David Bakke, Money Crashers Personal Finance
Think you don't need to teach your kids how to handle money and the value of proper money management? Think again. Unfortunately, personal finance courses are not taught in schools, so it's completely up to you -- and the earlier you begin the process, the better chance your children will have to grow up into responsible, thrifty young adults.
Here are five tips that can help you to impart the necessary financial knowledge:
1. Make the Lessons Unique
If you want your message to sink in, you have to take the time to make the experience unique. First, you need to speak to your children at their own level. Sit down together at eye-level, either at a table or in the playroom. Separate yourself from all other activities, and start the conversation by emphasizing how important it is. Even if you have a very young child, it's worth the effort.
2. Use Your Own Mistakes for Guidance
Just because you may have made some bad financial mistakes in the past, you are not disqualified from teaching your kids about money. In fact, you can use these missteps to better get your point across. Explain how your mistakes could have been avoided, and display credit card statements to use as a concrete example. Your kids will be much more likely to understand if they can see your lessons with actual numbers - and you explain how much money has been wasted on credit card interest.
3. Constantly Reinforce Your Teaching
Whenever you do have an opportunity to save money, be sure to involve your kids in the transaction. Even if you only take advantage of a cash back rewards of 5 percent from a credit card, it will still go a long way in teaching your kids the power of saving.
4. Motivate Them to Save More
The best way to motivate your kids to save more is to have them open a bank account. Younger kids may need you to open the account for them, but it's still a great way to show them how to save. Even if the account doesn't bear much interest, it's still important to instill in your kids the idea of setting money aside for the future.
5. Encourage Them to Budget Their Allowance
If you currently give your kids an allowance, encourage them to budget the money before you even give it to them. For example, if the allowance amount you decide upon is $10 per week, suggest that one-fourth of it go toward savings, another percentage toward charity (another concept very important to introduce), and the remainder to be spent as they wish. If they budget their savings, they'll feel that much better when it comes to buying toys or making other purchases.
Final ThoughtsThink back on your own childhood for a moment and see if you can remember any times when your parents or any other adult figure took the time to teach you something about money. If you're struggling to come up with examples, this is even more reason to put your kids on a different path. The average American carries nearly $7,000 in credit card debt, and almost half have less than $25,000 saved for retirement. In order to prevent that from happening with your children, start imparting your knowledge about personal finance today.
Women & Co., a service of Citi, is the go-to personal finance source for women. By providing financial content, commentary and community, Women & Co.'s mission is to get women thinking and talking about personal finance. Founded in 2000, Women & Co. is one of the longest running personal finance websites dedicated to helping women strengthen their financial futures.