Teaching Your Kids About Financial Literacy

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Kids grow up with an understanding of money based on what you show them. Your child probably knows when a certain bill stresses you out, so they could grow up feeling that particular bill is pertinent and deserves the most attention, or they could end up feeling as though money doesn’t matter. It all depends on if you show them how to use money in a smart way. One study even found that parents were more at ease discussing drug use than financial issues. How can this be?

One reason is because many adults do not believe they manage their own money very well, so they do not want to teach their children how to handle money poorly. However, this is one topic you cannot afford to miss with your children. What if you could teach your kids some of the tricks of the trade so that they become a money genius?

Here are some down-to-earth and clever ways to talk to your kids and teach them about how much money matters.

Teach Kids to Save With a Piggy Bank

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Kids are impressionable. You can teach younger ones how to save the change and grow their money little by little. One concept some parents use is called “Pay It Forward,” and it involves talking to your child about charitable giving. You can show your kids how just a few dollars can make a drastic impact and help a cause or someone else in need. You then announce a matching offer. For every cent or dollar saved, you will match it in the piggy bank.

Perhaps your child has a special interest in animals or maybe there’s someone you know suffering from a certain chronic illness. You can find charities that get your child interested in saving money and donating to a cause. This will teach your child about saving money, and it will also give your child a warm feeling when they are able to donate and help someone.

Show Kids What Things Cost

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Money comes from hard work, and when it’s gone, it’s not coming back. Teaching kids that buying anything means giving money up is an important step for them to understand the value of goods and what you earn. To teach younger kids the value of delayed gratification, butterfly kits are a fun option. They learn about tending to something and helping it grow while patiently waiting for the surprise. You can also open up a shop with pretend money and play with your children to help them learn about supply and demand.

Older children should learn by going out and helping you pick up things from the market or paying for tickets at a cinema. By actively learning what it costs for cereal or to grab a taco on Tuesday, you show your kids how to budget and take responsibility as they get older.

Give Your Teen a Bank Account

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While you do have to be at least 18 years old to open most bank accounts, you can always open up an account for your child as a savings account under your name, or you have the option of a joint account if they are older. Bank accounts for kids are a common way now for older kids to learn about the cost of what they want, statements, balances, withdrawals, and how to use online banking tools, since this isn’t something they’ll likely learn in school.

This is also a great way to encourage saving, as they’ll be able to see the amount of money they have going down every time they decide to spend. As your teen enters high school, they may pick up a part-time job. Having a bank account will give them a place to add a certain percentage into the savings each month. If they get a direct deposit for their paycheck, they can also set up a certain setting where a fixed percentage is automatically removed from the balance and added into their savings rather than their checking which is a great starting point.

Should You Start an Allowance?

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There are actually apps to help keep track of your children’s allowance and pay them small amounts when they help you with a job. For example, you can use Rooster or iAllowance. There’s also apps like Venmo, which you can get a sort of “debit card” attached to, meaning your kid will have a way to spend their allowance and see how much is left after each purchase.

Perhaps your kids can earn extra money by taking care of additional chores that no one ever gets around to, like mowing the lawn or vacuuming the living room, or by tutoring a younger sibling in a subject. Keeping an allowance will teach your kids the value of money and show them that earning money takes hard work, giving them a chance to understand the importance of hard work as well as money management.

Since they are only making a set amount of money they will have to learn how to budget for things they want or need to spend money on. For example, when they start driving, they will have to learn how to allocate their money properly to their savings, gas, eating out and socializing with friends.

For parents who need financial help, there is something else you can do in case of an emergency

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If a sudden emergency pops up, and you are faced with unexpected medical bills or emergency home repairs, you can check out Moneykey. Online loans could be an option for you. An online loan can be considered if you are faced with expenses from an unexpected emergency, but do not have the funds in savings or on hand to cover it.

Wrapping Up: Teaching Kids to Spend Wisely

Kids need to learn about money and responsibility slowly, gradually building up their knowledge of money. Experts suggest that tools like GoHenry and Santander Mini 123 help children understand the concept of banking, electronic money, tracking their spending, and budgeting.