Allowances as powerful learning tools for children growing up. It gives your child the opportunity to manage their own money while still having you as a guide during the times they falter.
However, with this in mind it is important to know your kid and how much allowance you can shell out. Moreover, the terms of the allowance must be clear-cut: Will their allowance be based off on their behavior, chores, or neither? Should they save a specific amount of their allowance?
Knowing all these boundaries you are teaching the children involved thus setting them up for financial literacy.
MORE IDEAS FROM Want To Teach Your Kids About Money? Start By Including Them In The Conversation : Life Kit
Saving is one of the most important financial habits to instill early on, in fact, the earlier the better.
Kids can start learning how to save money if you teach them how to save using a piggy bank or a give-spend-save bank. Through this they can start thinking about goal-setting as well as helping out other people should they choose to do so.
As they get older, you can look for a bank that’s kid-friendly and take them along as a teachable moment.
Talking about money within the family is still taboo in many places, yet the discussion doesn’t have to be dead serious.
Taking the time to talk to the family about the financial situation and how to manage them where everyone gets to have a say is setting up everyone to contribute to the family’s financial goals and better money handling as they grow.
If you’re unsure how to discuss finances with your family, you can read the Money as You Grow guide from the Consumer Financial Protection Bureau as a resource.
There’s no such thing as “too late”
Children are impacted by their parent’s finances and financial decisions regardless whether they like it or not.
When parents are transparent about their money choices, they’re teaching their children the basics or even so much more. Children then begin to understand the power money holds and it also serves as an opportunity for them to learn from your mistakes.
While kids and teens get to learn about a lot of stuff, most families and schools do not teach them how to manage their money. In some families, it is considered a taboo subject and many friends are too busy showing off to help others manage their finances.
Even the basics of financial literacy are not taught at an early age, resulting in many of us falling into the trap of consumerism and debt.
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