How we handle money can be one of the most important responsibilities of adulthood. You have probably heard about how teens and people in their early 20s often run into financial trouble because they don’t seem to understand the consequences of incurring great amounts of debt. While some debt may be unavoidable, having multiple credit cards and lines of credit, but with no way to pay them off, is simply foolish and irresponsible.
Thus, it cannot hurt to start educating children early on about the responsibilities that come with money. If you think the time has come to take that step, here are some tips:
How Money is Earned
Some kids might think that all you have to do is walk into a bank or use an instant teller, and presto, you have money. Impress upon them that you have to do something to earn that money and that it is not just there for the taking. Instead of just giving them an allowance, have them do chores as a way of earning their money.
Budgeting and Savings
That income earned from chores can also teach kids the basics of budgeting. For example, if they want to buy the latest Lego Batman toy, sit down with them and explain the cost. It will take x number of hours of chores for them to have enough to buy the toy or it will take xx amount of time if they don’t save all of their chores money each week. If your child is really set on buying something, they will be motivated to put the money away. You can also teach them to put money aside for toys or other things coming out later in the year.
You can also teach kids that prices often change. If they don’t mind waiting a few months for that new TRANSFORMERS DVD, it will be cheaper that the initial price. Having money saved also means that the child can take advantage of any sales he or she happens to run across.