Introduce Your Child With Good Money Skills

Feb 13, 2015: Most commitments require a process to complete. Yet, with careful planning and a good attitude, it can be an enjoyable experience for both parents and youth. It is not only a great time to commit to teach our children, it’s also a great time to recommit as adults to a financially fit future.

Most commitments require a process to complete. Teaching our kids to be good money managers is no different. So, here are practical, teachable parenting tips for you and your kid, so you don’t find yourself completely floored like I was (or worse yet, deep in kid-created debt).

{+} School Them On Interest: Teach your child about interest how it’s calculated, how it adds up month after month, how much more an item costs months later if it wasn’t paid off right away. Even young children can learn about interest and debt. Start by showing your child 10 pieces of candy. Next, show them your credit card that they see you use at the store or for making online purchases. Explain how the card is your promise to pay for the candy later, and how that promise can cost more if you don’t pay for the candy when they ask. Ask them if they would like 10 pieces of candy or 8. When they say 10, explain how a credit card basically gives you the 8 pieces, but charges you for the 10. Help them understand the true “price” of using a card to pay for something you can’t truly afford to pay for in the moment.

{+} Be Patient: Good habits take time. As you teach new concepts, realize that each child learns at his/her own pace. Some may pick up money concepts quickly. For others, it may take more time. If it becomes a battle or either side gets frustrated, it’s time to cool down and try again later. It is also very helpful to have a plan in place before you begin. Using a formal teaching method or money management system will help both sides eliminate frustration. Find a money management system designed specifically for kids.

{+} Mistakes are Good: Mistakes are good because by making mistakes one can understands the correct thing. This may seem counter intuitive, but it is true. Think of it like this, would you rather your child spend foolishly on a toy when he’s 9 or make a poor purchase when he’s buying his first car? This is the training ground and mistakes will happen. The consequences are much easier to handle while they are still at home under your roof. Allow them to make mistakes. It’s OK. Help them learn from those mistakes and make better choices next time.

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{+} Disclose The Mystery: As adults find the use of credit cards difficult so it’s no surprise that kids find them baffling, as well. Most kids view this mysterious, magic piece of plastic as completely different from “real” money. So, make sure they fully understand how real your purchases are. Show them how you take the money from your checking account to pay off the bill. Let them see how you use money you worked all month to earn to pay off the amount. Have them find the interest charges on the bill the credit card company is ready to charge you if you don’t pay off the balance.

{+} Take It As A Fun: To teach the value of money to your children. Use games, activities, and even jokes to teach your kids about money. Go online and you will find dozens of activities and money games on the subject. Even toddlers enjoy tossing coins and counting change. There are videos on the internet that show the process of coin making and printing currency. Use play money and set up a store where your child can purchase small items. It is true that kids learn faster when they are having fun.

 

 

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