Use Cash - While credit and debit cards are more convenient to use, children are watching how adults manage their money. Using plastic prevents them from seeing the actual exchange of money for purchases. Allow the children to see that in order to make a purchase, they must hand over cash.
Don't Spend the Money Right Away - Always set a good example. Before you go shopping, always make a budget, plan out what you want to buy, and compare prices. Teach children that it is beneficial to plan all purchases before making them.
Teach Children the Value of an Allowance - Most allowances are linked to chores such as making beds, doing dishes, or taking out the trash. Giving them the opportunity to earn extra money for larger chores is always beneficial. Whatever method you use to distribute the allowance, it's critical to emphasize that saving and sharing are just as important as spending. Teach children to save money in piggy banks or in a bank account by reserving portions of their allowance.
Bank & ATM Visits - Taking a trip to the bank or an ATM is a great way to explain where money comes from. Explain that banks don't just give out money; they're also a place for people to keep the money they've earned. Call your local credit union and arrange for a tour of the branch to demonstrate how money is stored and dispensed.
Delayed gratification teaches children that good things come to those who wait, which helps combat the buy now, pay later mentality. Always emphasize that patience pays off. This strategy may help them avoid credit card debt later in life.
Brand Names Do Not Always Mean Better - Emphasize that shopping by brand is not always advantageous. At the grocery store, generic products demonstrate how people on a budget can save significant amounts of money.
Keep Track of Their Money - Teach children the value of understanding where their money is going. Keep track of their finances in a notebook or on the computer. You can even make a file for them to keep their store receipts and bank statements in.
Wants vs. Needs - The ability to distinguish between wants and needs is at the heart of any good money management program. This realization will help lay the groundwork for adult financial management.
Create a Budget - Sit down with your child and create a monthly budget. Explain the benefits of keeping track of all monthly expenses and then determining how much money is left over to save or make a purchase they want rather than need.
Make a Wish List - Priorities are difficult for everyone, so sit down with your children and make a wish list of everything they want to do with their money. It will help to prioritize the items on the list.
Games and Other Budgeting Activities - Board games such as Monopoly, Life, and Easy Money are excellent ways for parents to practice money management skills with their children. Look for other fun ideas and activities to promote financial literacy in children on the Internet.
Make the Most of Their Savings - Give your child a variety of savings accounts that can earn them interest, such as CDs, bonds, or regular savings accounts. Use an interest calculator to demonstrate to them how their money can grow over time with simple monthly interest. I'm sure they'll be astounded.
Money management is a life skill that you can teach your children when they are young. It is critical to use yourself as an example as they engage with what is going on around them. Make your lessons age appropriate in order to lay a solid foundation for good money management skills as they mature into young adults."""