Wednesday, March 27, 2013

Teaching Kids Money Management Skills {Guest Post}

Some parents unknowingly teach their kids poor money habits. Whether they overspend, make impulse purchases or fail to budget their money, kids can follow in the footsteps of their parents and make poor decisions. This can have a great impact on finances in their adult years. For example, if a parent accumulates a lot of credit card debt, older children may do the same. Fortunately, there are ways to break the cycle.

1. Educate yourself on good money habits. If you don’t know how to budget or save, aim to improve in these areas. You might take a workshop on financial planning, as well as read books or search online for personal finance advice. Once you have a firm grasp on your personal finances, you can pass this knowledge to your children.

2. Teach your child how to save. Whether you have a young child who wants a new toy, or a teenager begging for a car, make the child responsible for some of his purchases. Paying for an item himself will not only increase your child's appreciation for the item, but it will teach him the value of hard work and a dollar. Have younger children complete chores around the house to earn money, and encourage older children to get a part-time job after school.

3. Let your child make mistakes. Good money management skills are not developed overnight, and your child may make a few mistakes. This is to be expected. Do not grill or discourage your child. Explain that everyone makes mistakes and pinpoint where he went off track. Work with him to avoid future problems and help him make wiser money choices.

4. Delay instant gratification. Teach your kids how to wait and look for coupons. Lead by example. For example, if you’re shopping for skincare or personal body products for yourself, go online and look for coupons. Demonstrate creative ways to gain access to coupons, such as by signing up for an email club or taking a survey.

5. Look for money-saving opportunities. Being financially savvy is the biggest lesson you can pass to your children. For example, you might look for banks that offer higher interest rates on savings accounts, and open an account for you and your child. Additionally, you might go grocery shopping on double coupons days, and then combine coupons with sales to lower your grocery bill. Also if your buying skincare products online, you can look for coupon codes for and enjoy bonus discounts or free shipping.

There is no limit to the number of money lessons you can teach your kids. Even if you can’t cover every area of personal finance, provide your kids with a basic financial foundation. This helps them make smart decisions and alleviates future money woes.

Contribution made by Laura Johnson


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