Miss Farah

Help Children Develop a responsible attitude towards Money!

Posted on: June 7, 2010


 

When you think about a child’s financial education, who do you think is the primary teacher? First and foremost, typically, it is the parents’ job. Although many young people may receive allowances or inheritances, without rules provided by the parents and knowledge of countless financial pitfalls, how can parents expect their children to make smart decisions? Here, a few points to help your children develop a responsible attitude about money, saving, budgeting, investing and financial planning.

– Be a Role Model
First and foremost, parents must be role models. The relationship between a child and his or her views on money is very similar to your own spending habits. As soon as your child can count, introduce him or her to the concept of money. It is important to discuss your own financial goals and plans with your child rather than making it a taboo topic. You can determine how in-depth you would like to go, but at least you will bring a younger generation into the plan. This can range from planning your estate to paying the monthly bills.

– Encourage Your Child to Save
You can do this by designating a portion of the child’s allowance for a
savings account. It is important to discuss the child’s account statements together, and stress the concept of “paying yourself first.” Demonstrate what it means to earn interest on the amount your child saves. Keep good records of what the child saves, invests and spends. Make sure you set attainable goals for young children and gradually increase this as they grow.

For older children it is especially important to develop a long-term savings plan. Parents can consider an occasional matching grant to encourage regular deposits into the child’s account. As the account grows, explain the basic investment types, such as cash instruments, stocks and bonds. Make it an engaging conversation. It may be useful to discuss companies from which the child has toys or clothing.

– Develop a Sense of Financial Empowerment
Third, develop responsible spending habits that encourage mature choices. For example, when grocery shopping bring your child along and demonstrate the effect coupons can have on an item’s price. Show him or her the outcome of planned spending vs. unplanned spending, and how it affects a budget. It is important to guide and advise your child rather than dictate spending habits. You want to help your child develop a sense of financial empowerment.

– Initiate an open discussion on spending habits and the pros and cons of different purchases. Make sure to not treat money as something that is easily dispensable but rather worked for. Explain to your children that money does not grow on trees but is earned, and therefore should be value.

Article taken from www.forbes.com

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2 Responses to "Help Children Develop a responsible attitude towards Money!"

If only I had a quarter for each time I came here! Great read!

missfarahsclass.wordpress.com’s done it again. Amazing read.

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