Personal Finance Education For Your Young Children
Children know something about money at a very young age. They know that they can buy things with it. However, for many children, that is the extent of their knowledge. There is no reason why you should not teach them a little more about how money should be managed and how they can make the most of it. If you want to start teaching your children a little more about personal finances, read this article for some ideas.
In order to teach your child about the value of money, you may want to start giving him an allowance. Five dollars as week is a good start. Explain to him what the ground rules are in regards to this money. Let him know that his allowance is his very own and that he will make the decision on what he wants to do with it. Since this is the first time that he has full control of his own money, explain the options to him. Basically, there are three options: save, spend, or give. Give examples for each option so that he understands. Give him three jars and label them with each option. In this case, glass jars are better than piggy banks because he can easily see how his money is accumulating in each jar.
You can teach your child about earning money. He probably knows that you go to work everyday to earn money for the family. Now, you can give him a chance to earn his own. Do not pay him for chores that he should be doing already. Think of extra things that he can do, and make this optional. If he wants a little more money beyond his allowance, he will have to work for it.
If your child is old enough, you can open a savings account for him. The purpose is to give him the experience of using banking services and understand the role that a bank plays with his money. Show him how to fill out a deposit slip to make a deposit. Show him how he can withdraw money. Teach him how to use the ATM. All of this exposure will get him comfortable with banking and broaden his financial education.
Playing games that involve money is a wonderful and fun way to introduce money concepts. Games like Monopoly are education and fun. Children can see how certain money decisions can affect the future outcome. They will learn about good investments and bad investments. They will learn that sometimes they have to pay fees and penalties, and sometimes they will get rewarded. Use these playing opportunities to guide them in a decision making process.
The grocery store is a great place to teach your child about what money can buy and how products are priced. You can teach him about how to maximize how much he can buy by taking advantage of discounts and coupons. Show him the way foods are packaged and how that affects the unit price of foods.
If your child knows what money is, you can gradually teach him simple money concepts. This is the time to start helping him build a sound foundation that will last into his adult life.
