Instilling Good Habits Young


As parents, we aim to instill good habits in our children at a young age. We teach them to say “please” and “thank you,” we encourage them to share with others and we send them to school to learn; but what are we teaching them about their finances? As our children continue to grow, educating them on making sound financial decisions will create young adults who insist on having an active role in their finances. Currently, Pennsylvania does not require students to take a financial literacy class in school, so here are some tips on how to make budgeting a family affair at home:

 

  1. Introduce them to the concept of money at a young ageKids-playingstore
    Is your child learning how to count? Why not help them learn to count with money, suggests CNN Money. Play pretend “store” at home where kids are given a set amount of funds and miscellaneous items around the house have a price tag. Help them to determine what they can and cannot afford. Encourage children to assist with grocery shopping. Discuss with them your budget and calculate items as you place them in the cart. Give your child the responsibility to ensure you are within the allotted budget. Make money, finances an open topic in your household, and encourage kids to ask questions!
  2. Get them involved in the family budget. Sit down with kids and help them to brainstorm line items for the budget; what do they think should be included? (Groceries, electricity, clothing, etc.) As an introduction to budgeting, CNN Money suggests labeling three jars: Save, Spend, Share. Each time they receive money, help them determine how much should go into each jar. Explain to children that there should always be a goal behind your budget and help them to determine short and long-term financial goals for themselves.
  3. Discuss the importance of saving. When teaching your children how to save, stress to them the importance of saving from the top. (Putting money into savings before any other expenses.) Discuss why we save money, and some of the things we save for like emergencies, vacations and Christmas. Provide your kids with real examples of unexpected expenses that can occur and how an emergency fund can help plan for these incidents. Utilize visual aids when kids are saving, allowing them to put a sticker on a poster or color in a box when they have reached periodic savings goals.
  4. Teach them the dangers of too much debt. Instilling the mentality of delayed CreditScore.jpggratification early on in life is crucial. Those scenarios in the toy aisle when your child is asking for that toy is the perfect opportunity to talk about saving and why we can’t always buy things immediately when we want them. Discuss the advantages and disadvantages of credit and credit cards, as well as proper use of both. It is crucial for our kids to realize a few financial missteps early in life can take years to repair their credit.

 

The conversations we have with our children about money do not have to be perfectly scripted; they just need to happen sooner rather than later! Actively engaging kids in our daily finances today creates smarter savers and spenders for tomorrow.

 

CNN Money Link: http://money.cnn.com/pf/money-essentials-kids-financial-responsibility/index.html

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