A few key, simple lessons about money at even a very early age will create a strong foundation of good financial habits that will benefit them for years to come.
Here are some quick tips for easy finance lessons at any age:
Food isn’t free. Take your children with you while you grocery shop and tell them what different items cost. Explain that you can only buy what you can afford.
Start a piggy bank. Give your child his or her own personal piggy bank and make rules about when it can be emptied.
Money must be earned. Start an allowance in exchange for chores; help your kids decide how to spend their allowance, and encourage smart purchases (a new backpack vs. gum and candy.).
Crunch numbers. Sit down with your kids and show them how much money they can accumulate by the end of the year if they save 50% of their allowance instead of spending 100% each week.
Make frugal choices. Preteens may start asking you for designer clothes and the latest trends. Pose them with budgeting choices: you can have these jeans if we skip the movies for a month.
Comparison shopping. Pick a big item your family is ready to buy (TV, gaming system) and task your child with doing the comparison shopping. Encourage them to read reviews and pick the best-rated product at the most competitive price.
Start a savings account. Make sure those summer job earnings are going towards a fund for college and sundries. Find out if your bank has a special teen banking program.
College costs more than just tuition. Now is the time to talk about housing, food, books, and all the other costs. Be realistic about what you can afford, and how much your child is expected to contribute.
COLLEGE & BEYOND
Use your credit cards like cash. Emphasize the critical importance of responsible credit card usage, and spell out exactly what will happen to your son or daughter if they wind up on the bad credit bandwagon.
Track expenses. Make sure your kids are cognizant of how much they’re spending each week, and how it adds up over time. Help them piece together a budget based on their earnings and expenses, no matter how meager they may seem. Make sure they know that an “emergency fund” is something they need to build for themselves – and not just a call to mom and dad.