With summer almost unofficially upon us (Memorial Day weekend signifies its unofficial start), kids will be manifesting a higher proclivity to spending their parents’ money. Just go to any vacation or recreation spot. It is a good place to observe how kids understand (or don’t truly understand) money, that is, how it is earned, how to properly use it, and more importantly, how to manage it. As kids get older, they tend to become more thoughtful about money. This provides parents with an opportunity to teach them how to save more, spend it wisely, and earn money through responsible efforts.
If you’re feeling guilty because you can’t buy your child that video game system he desperately wants, or you’re asking him to choose between playing soccer or taking music lessons, we have one word for you. DON’T! Now is the perfect time to teach your kids some valuable financial lessons so they can learn that budgeting is how the world really works.
Here are some steps you can follow:
Step 1: Expose Your Kids to the Realities
Sheltering kids from financial realities does them no favors. A good grasp of personal finance is one of the most valuable life skills a person can have. And while previous generations may have been raised with the constant admonishment that “money doesn’t grow on trees!” too many of today’s parents neglect that lesson. It’s time to change that.
Step 2: Tell Kids the Truth
Kids are perceptive. If you’ve been acting anxious and on edge lately due to financial issues within your household, they’ve noticed. Rather than keeping them in the dark, explain (on their level) what’s going on in the family’s financial world. This might mean explaining why vacations have to be cut back or why certain hobbies/activities have to be curtailed.
Step 3: Explain To Them How Much Things Cost
Some parents are surprised to find out that their kids don’t have a very good grasp on what things cost because they have been sheltering them from this. A great hands-on way to open their eyes is to take them on a “money tour” around the house. For example, kids might not understand that hot water costs more than cold water, or that increasing the A/C results in higher power bills. This exercise will teach them how they can conserve and thus help the family save money. You can also pile up all of the bills for the month and have them look at the amount on each one. Show them what the family’s cost of living is and again reiterate the areas where they can play a part in reducing the costs.
Step 4: Giving Gifts
Parents get a kick out of the chance to be liberal while offering cash to their kids. Notwithstanding you should guarantee that they are educated in the idea of responsibility. Show them the significance of not over spending. Ask them every so often how they spend their pocket cash. Show them how to monitor their cash. Urge children to save cash to buy something they’d jump at the chance to have. Youngsters will be more capable with cash when they know the exertion it takes to get it. You can urge your more established teenagers to take up small jobs or offer neighborhood services to earn pocket money.
Step 5: Realize That Kids Learn What They Live
It might seem like common sense, but you are your children’s most powerful instructors. When you ring up a vessel-heap of VISA card obligation, take out extravagant home loans or auto credits, and neglect to save anything, that is the thing that your children come to see as typical. And, in the event that you are displaying unfortunate money related habits, you can’t practically anticipate that your children will “do as I say, not as I do.”
Step 6: Deprogram Them
Kids are constantly bombarded with information about expensive things, whether it’s the fancy sports car they like, the wardrobe of their favorite athlete or actor or the many appeals to luxury in the 40,000 commercials that the American Academy of Pediatrics estimates the average American child sees each year. What they aren’t bombarded with is knowledge on how to manage money effectively. And while schools are increasingly incorporating money issues into the existing curriculum, the broader concepts of personal financial management still aren’t taught. Frightening though it may be, some schools rely on free “educational” materials from the likes of VISA and MasterCard. Watch out! Pay attention to and work to counteract the messages your kids are getting on the “get it now” culture.
In a future blog post, we will provide you with Part 2 on this message of Educating Your Kids on Money.