Tuesday, January 20, 2015

How to Raise Financially Smart Kids

The responsibility of money typically falls to the parents, but that doesn't mean you can't teach your children from an early age to spend wisely. By influencing them during their developmental stage will help to prepare them for the future, or more specifically, their future. Implement some fun ways to show them the foundations of money and at the same time they will become money-conscious children.

Explain the Differences between Wants and Needs

Believe it or not, there are quite a few adults that still find it hard to understand the difference between what they want and what they actually need. This is most likely because their parents didn't inform them when they were kids. When your kids join you on a shopping trip make a point to tell them why you are buying vegetables, cereal, toothpaste, soap etc. Explain the necessity of these items then move over to the candy isle and patiently talk about how chocolate isn't really necessary to survive. They might not agree at first, but deep inside they will remember what you said.

Make them Conscious about Prices

The one thing kids find hard to accept is the difference in prices. They don't care if a toy costs $20 or $200, because they don't understand this difference. On your next shopping trip give them a calculator and ask them to keep track of the items you are placing in your cart. It's important that you tell them how much your budget is and let them see the different prices for the different products. It won't take long until they start to grasp the value of a dollar. You can look for fun ideas on the subject on websites like www.discountrue.com which are devoted to frugal lifestyle and saving.

Give your Children an Allowance

It's up to you to decide what the best amount would be in terms of an allowance, seeing as you understand their maturity level better than anyone else. The important element regarding this exercise is to help them budget, which means if their money runs out you shouldn't give them more. Stand your ground and let them start learning how to spend more wisely.

Help them Plan a Budget

Some of the things your children will want to buy are going to require some time for saving. What better way to teach them some discipline? Help them set up an amount they can put away each week or month until they have enough to buy that costly item. The great thing about raising money-conscious children is that they won't have trouble saving money when they are older, because they already developed that skill at a very crucial point in their lives.

Inspire them to make Money

It doesn't matter what entrepreneurial skills they develop, as long as they get a chance to earn their money. This can be anything from establishing a lemonade stand to mowing the lawn. Chances are they will start to negotiate better terms and increased payments as their "work" continues and this is exactly what you want. They won't just learn that having money requires effort, but also to strive for bigger and better things.

As your kids get older you can start to teach them about credit cards, investments and the different types of bank accounts they can use. Within a few years, when they are ready to leave the house, you won't have to worry if they will be able to take care of themselves financially.