A child has a great capacity for learning during their pre-school years. They can learn to count, write their name and learn the value of money at the early age of just three years old. Starting when a child is full of wonder and wants to learn is the best time to introduce the importance of making wise decisions with their money. They can learn how much a dollar is and how many dollars it takes to purchase small items when you are out shopping.
Saving for the future
As the child begins to enter school and now is exposed to the world of wants, you can start with simple things such as teaching them with an allowance. For picking up their things, making their bed and completing their homework, they earn money on a weekly basis. Before the money is first handed out, advise the child the importance of putting away some of his earnings for something that may be needed later on. Instill the concept of saving money at the beginning of all monetary lessons. In this case, the child must take a portion of this allowance and place it in a piggy bank.
By establishing a savings at an early age you are teaching your child invaluable habits for the future. You can show your child from time to time how much he has saved, by emptying out the piggy bank and counting up the money. As the child grows older those early habits will remain a part of his dealings with money. He will refrain from spending all of the money he has earned and will continue to place a portion of his money into a savings account for something that may arise in the future, such as a car for instance.
Mistakes must be made
Some tough lessons can be taught at an early age too. By allowing your child to spend their money all at once, they will soon come to understand that if they want to purchase something else, they have to save up. Children often buy on impulse. The thrill of being handed money and then going to a store, most of these children will pick up as much as they can and spend their entire piggy bank’s worth of money.
By not bailing out your child when they now desire something else and has no money, they will learn early on that their haste has prevented them from purchasing what they wants. This is an important lesson in teaching children that not only does money go quickly, but also it is not easily earned. By allowing a child to make these mistakes early on, it teaches them a valuable lesson for the future. They come to respect the work that goes into making money and as a result, are more careful with how they spend it.
Borrowing and Interest
It is important that young adults learn to spend within their means. By now, most parents have taught them the value of money and the importance of saving. The problem is that now the expenses are larger. Consider that new car he wants to purchase. While you can be proud of your children for saving some money over the years, you certainly do not want to see him throw it all away in a single outing.
Showing your child how to lower the bar a notch or two and still get a great vehicle without emptying the bank account is teaching them the art of shopping around. By purchasing a car within their means they is able to afford the gas and repairs that go with it. These are things that you should be able to discuss with your child since they has been exposed to the concept of money over the years.
Credit Worthiness
One thing that many parents do not share with their children is the importance of establishing credit – good credit – at an early age. Granted, credit cannot begin to be built until the age of 18. However, learning how to be responsible with money early on can help avoid the pitfalls of bad credit in their adult lives. Sit down with your children during their teens and explain to them what happens when they start taking on loans and credit cards. Instill the importance of paying bills in a timely manner and not biting off more than they can chew. Their future finances depend on you.
By starting your children off with the importance of handling money responsibly they will grow to know that savings and budgeting are a part of their lives that is meant to be taken seriously.
Guest Post: This post was written by Ella Davidson of Coupons.org. Coupons offers coupons and deals for a wide-variety of retailers. The site also strives to provide premiere couponing tips and tricks to empower consumers.
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