Teaching your kids about the value of a dollar could not come at an earlier time. No matter how old (or young) they are right now, it’s never too early or too late for them to understand the importance of being savvy with their finances. While they may be managing nothing more than a dollar which they get as their allowance, starting now might mean difference between having a child who demands to have a smartphone and a child who saves up for one.
1. Use grocery time as practice time.
This game could help you to finally get your kids to stop pulling so many items off the shelves and wrecking your grocery budget. Before you enter the grocery store, tell your kids that they can spend up to $5 or any amount you are comfortable with in grocery items. This game is great for those kids who are starting to learn about addition and currencies. Give your kids simple calculators to aid them in their additions and then let them have their own space in the grocery cart. When they go over their budget, use this opportunity to teach your kids about identifying alternate and cheaper items.
2. Make them responsible for their part of the family budget.
Each month, you spend for your kids’ clothes, food and other expenditures. Since you’ve already identified how much you spend per month on each kid, then you can tell them that they can have a say on how to spend that amount. Tell your kids first on what items they can spend their money on, like food items, clothes, and school supplies to name a few, and then get them involved during your shopping trips. However, make sure that they come up with a working budget that they should stick to when shopping.
3. Allow them to make mistakes now.
When your kid decides to spend his or her entire savings on a toy which you know they will bore of in two weeks, let them do so. This will allow them to learn, the hard way, the lesson of throwing money away on passing fancies. Of course, it’s intrinsic that you set a limit on the amount of money that your kids can outright ask from you. If you indulge your kids again and again, there will be no lesson to be learned since they know that they can always rely on you to pay for their indulgences.
4. Introduce to them the stock market and the concept of trading early on.
While spending money wisely is an important skill that you should inculcate among your kids, you should also introduce the idea of investing money in little bits as early as your child would care to appreciate. Professionals who have jobs at Nick Scali even suggest that you can teach them how to “buy and sell stocks” through a practice trading account. Taking risks is necessary for when you want to learn how the stock market works, and the earlier your kids learn about this set-up, the more comfortable they will be later on in their adult life with trading real stocks and using real money.
Kent Farell, a registered financial planner and writer, shares the best insights on financial management and investment. He also teach financial literacy in college and hold seminars for professionals. He also loves to give wise tips about spending, saving and overcoming debts.