Four concepts to teach your child about managing their money

4-concepts-to-teach-your-child

 

We love our kids and we want the best for them. More often than not, we want them to have things and experiences that we did not when we were younger, and we work hard to teach them the skills and they will need to succeed in their personal and professional lives.

For example, we teach them how to be a good friend, how to work hard in school and how to be show good sportsmanship, but one thing that often falls off the list is teaching them how to be good stewards of their money. And, as many people know, money can be a huge cause of stress if mis-managed. We spend the majority of our time working for money, spending money, worrying about money and arguing about money.

Consider these statistics:

  • Average household Credit Card debt $15,762
  • Average household college loan $48,172
  • Average total household debt $130,922

If we start teaching our kids at young age, maybe they can avoid becoming part of those statistics and save them from the stress that so often comes with finances.  It is possible to teach your child how to manage their money correctly at a young age, and the sooner you start the better Teaching our kids about money does not need to be tedious, here are four concepts all children should learn and how you as a parent can help teach them:

  1. How to save money
  2. How to spend money responsible
  3. How to give money
  4. How to invest money

Concept #1: Teach your kids how to Save Money

Saving means putting something away in a safe place to be used at another time. Some simple examples of things to save for include expensive toys, video games,  spending money for vacations, gifts for friends and family,  a new car and other things your child or teenager may want. How can you help teach your child to save money? Create a savings goal with your child.

Concept #2: Teach your kids how to Spend Money

Spending money is usually the easiest thing to do with money which is why it’s important to teach our children to spend wisely. It’s simply teaching them how to save their money to spend it on the things that really matter most. Teach your child to ask his or herself “What do I want to spend my money on?”  Help them create a plan for things they’d like to buy–candy, Pokemon cards, new clothes,, new shoes, anything that would be considered an impulse buy, etc. How can you help teach your child to spend money wisely? Create a simple budget with your kids.

Concept #3 Teach your kids how to Give money

Giving is fun but it takes practice, it also helps teach our children how to think selflessly. Giving takes the focus off of our needs and wants and forces us to consider those of others. How can you teach your child how to give? Research 3 to 5 charities that are meaningful to you/your child to give to.  Connect your kid to the work the charities do.

Concept #4 Teach your kids how to invest money

Investing can simply be defined as spending money to buy something so that can make you more money, think of starting a lemonade stand. You help your child invest in some lemon, water and sugar and then sell lemonade for a profit. How can you teach your child to invest money? Start a business for fun with your kids! This can be anything from a lemonade stand to selling paintings.  Then go back to concept 1 and teach them to save!

Prepare your children for the future

Teaching your child these four simple concepts about money can help set them up for financial success. Break down these financial concepts into simple, hands on tactics. As parents, with the right activities and patience, we can raise financially literate kids that grow up to be wise stewards of their resources.

What other activities have you done with your child to teach them about money?

Posted by Erik Garcia on Mar 29 , 2016

Erik Garcia
Erik is a New Orleans based Financial Advisor offering financial planning and fee based investment advisory services. Since graduating from Tulane University’s A.B. Freeman School of Business in 2001, Erik has worked with a wide range of clients from entrepreneurs to individuals and families specializing in helping them make smart financial decisions regarding savings, debt, and insurance as well as helping them make wise investment choices. Erik believes financial success is not only due to successful investing but more importantly healthy attitudes and behaviors towards money.