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Children and Money
Ever wished you had known more about finances when you were younger? Though we might not always think about it, teaching our children the value of money is one of the best ways to help prepare them for a financially sound future.
Kids and Debt: A Growing Trend
Because people today are borrowing more money and taking longer to pay it off, teaching your children good financial habits at a young age is more important than ever. Research shows how younger generations, specifically those born after 1980, have substantially more debt than older generations. While part of the reason is because older generations have had more time to pay their debt off, another more pressing reason is because it’s becoming harder and harder to get by today without accruing at least some form of debt, whether it’s student loans, credit cards, or something else.
Helping Your Kids Learn More About Money
It’s important to start teaching kids the value of money at a young age. After all, children who understand finances are much more likely to be better with their money when they’re older.
Help kids get a leg up on saving by:
1. Acting as a Role Model
Younger children learn by seeing, so the first step in showing them the importance of money is to practice good habits yourself. Let them in on your spending habits, and show them the importance of saving for something when they want to buy it. Encourage them to keep tabs on their money and help them set goals for things they want to buy.
2. Giving Them an Allowance
Start teaching your child about the value of hard work early by giving them an allowance every week. It’s important for children to be financially aware early on—that way they’ll be able to implement better spending habits as they grow older. Make a list of chores they need to do in order to earn the money, and help them see that in order to spend money they have to earn it first.
3. Encouraging Them to Save
Giving your child their own savings account and having them be involved in managing it will help them practice sound financial habits. Even doing something smaller like placing a piggy bank in your kitchen and having your child drop their loose change into it can show them how saving and spending works. Once the piggy bank is full, let them add up the amount and talk about ways to spend it.
4. Helping Them Set a Budget
Helping your kids set a budget is one of the best ways to instill good money habits. If your child wants to buy something with their allowance, help them prioritize their budget – how does this expense fit in? Can they afford it or do they need to save up for it? You can even match their savings once they reach a certain amount. Helping your kids set a budget shows them the importance of money management and how crucial it is to save.
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