While it’s a parent’s job to support and protect a
child’s physical and emotional well being, it is also important to ensure your
child has and will continue to have financial health. Budgeting, saving and
rationing money are lessons that will come in handy throughout your child’s
life.
As a parent, you must be sure your child is
educated on these very important lessons — particularly when the average
household has over $130,000 in total debt. Here are some tips to help you set
your child up for financial success early.
Watch your words
It is important to carefully choose the words you use when you talk to you child about money, as
they can have more of an impact in how they learn and feel about personal
finance than you may know. For example, telling your child that something is
too expensive implies a sense of lack — both a lack of power and a lack of
control. Hence, negative emotions become associated with money, along with a
feeling of helplessness.
Instead, empower your child by explaining that
money can be controlled through good choices. Telling your child that you don’t
feel something is a smart way to spend money on can be more powerful and
positive.
Educating at home
With many schools shunning the idea of teaching
personal finance to students, the responsibility lies solely with parents to
teach kids the fine points of managing their financial lives. Start early by
teaching your child to live within his or her financial means. For example, you
may wish to set a monthly budget for your child that includes money for extras
such as clothing and fun activities. Then, work with your child to divvy up the
money according to priorities.
Encouraging your child to save his or her own
allowance or money from a job to put toward long-term goals, such as summer
camp or an expensive pair of sneakers, can help him or her better understand
the concept of making a purchase.
You can open a savings account in your child’s name
and teach him or her about online banking, or you can have him or her save
money in a jar or box. This way your child can physically see his or her funds
grow.
You may even embrace various tech gadgets to
demonstrate to your child budgeting and saving. For example, smartphones such
as the Samsung Galaxy S7 offers versatile and universal
mobile pay options,
such as Android Pay and Samsung Pay. These help your child get used to staying
on top of paying for the items they want.
Make it fun
There are several games and apps that teach kids
about money. A classic board game, Pay Day, makes learning about finances and money management interesting. This game
teaches kids the fundamentals of adhering to a budget as well as concepts such
as insurance and savings accounts.
Net Worth is a card game that is similar to Crazy Eights and has a
goal of collecting financial assets and getting out of debt — two very real
scenarios. The game encourages kids to overcome various financial obstacles,
for example, being let go from a job.
With a little creativity and effort, you can teach
your kids smart money habits when they're young that will help them make better
financial decisions as adults. And that’s something that you can’t put a price
on.
