Wednesday, May 29, 2013

6 Ways to Teach your Child Money Management

Benjamin Franklin said, "a penny saved is a penny earned." In today’s economy, this expression could not be any more of value. Literally. Wise financial planning encourages wise spending and saving for the future and in the long run can have a profound impact on your child’s life. But when and how do our children learn about money, financial responsibilities, savings, budgeting, debt, and credit? Perhaps some in high school - but for most children … they learn at home.
Information for this post is sourced from Genworth Financial in partnership with the SheHeard Influencer Network.
There are many ways to incorporate smart financial decisions into your child’s life that will help teach them the importance of money.

Turn shopping into a learning experience
I’m a big advocate of buying store-brand rather than name brand. By teaching them value over name, it’s a great teachable moment of comparison-shopping. Make a list before venturing out to the store. Keeping a list helps a child understand preparation instead of instinct buying.

Give your child an allowance
Your child is old enough to start earning an allowance as soon as s/he understands simple commands. While there are mixed opinions on whether or not you should give a child an allowance – in the long run, it teaches kids the basics of "earning". Parents can also use allowance to help teach their child the difference between a "need" and a "want".

Open a checking/savings account for your child
Many banks and credit unions offer a child’s account now and offer great incentives for reaching goals. Owning and maintaining an account helps a child learn the importance of life skills and that mom and dad’s piece of plastic in their wallet doesn’t mean an unlimited amount of money.

Help your child open a small business
During the summer, a lemonade stand is a great way to teach children financial responsibilities. Or maybe your daughter is great at making jewelry or your son has enough free time to mow some yards or run the snow blower. Plan a garage sale and have your child(ren) go through their things. The adventure of running a small business is not only a great financial lesson – but also a great confidence booster. Starting a small business helps teach a child how to set and achieve goals, understand price and profit, and develop the basics of math.

Teach your children priorities – not to memorize them
Prioritizing can help day-to-day decisions beyond those dealing with money. Teaching children to consider costs and benefits, prioritize their wants, and make thoughtful, informed decisions will be far more valuable than having them just memorize the phrase: "Needs are food, shelter, clothing." Empower our children to be good thinkers.

Be patient
Depending on the age of the child, it can take awhile for them to understand that once they’ve spent all their money, they cannot have anything else until they’ve earned more money. They will eventually learn.

The best way to teach is by example. Do your best to practice what you preach. There are many ways to teach children about money. The most important thing parents can do is to communicate with their children about managing their money.

I'm not saying I'm an expert by any means. But the older I get, the smarter I get with my money. I was taught to spend my money wisely - but I'm a woman. So there's that. Stay tuned for my next segment in a week: Women and Finance. My husband ought to love that one! ::wink wink::

Are you teaching your child how to manage their money yet? What do you do to instill money management in your child and how old were they when you started?
Disclosure: The kid in the top of my article is mine - to the best of my knowledge.
This post was inspired by Genworth Financial. All opinions are always 100% my own. For more information about money management, budgeting, life insurance, etc, visit the Genworth Financial website.

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