A financial coach is advising families that their children should start contributing to the household once they’re earning money. A survey of 1500 parents with children over 18 found that 44 percent of them paid for their kids’ groceries, 31 percent let them live at home rent-free, and 26 percent paid for their electricity and phone bills. With 19 percent helping their children with a deposit for a home of their own.
Train Children Early
Train your children early so they don’t end up needing parents’ money later on. The earlier you start to talk to them about money, the better, so you can get them to understand the value of money. Teach them the value of a budget. Once they’re earning their own money, they can save a little bit, spend a little bit, perhaps give a little bit.
A good rule if you’re helping your children temporarily is, it’s going to be paid back. First, agree how and in what timeframe it’s going to be paid back, because it’s allowing them to learn and be financially secure themselves.
Expose Financial Literature To Them Early
Financial literacy is one of the most empowering gifts you can give your child. Just the fact that it’s on your radar means you’re already way ahead of the game. Children who don’t understand the most basic financial concepts grow up to be adults who make costly money mistakes.
Investing for Kids: How to Save, Invest and Grow Money, a book on money management for kids, written by Dylin Redling and Allison Tom of the popular blog Retire by 45. This fun little book takes kids through investment basics with help from the Dollar Duo, Mr. Finance, and Investing Woman. The book helps readers understand how stocks and bonds can help you build wealth. Written based on the idea that the sooner we understand money, the sooner we can use it to build a better future.
How to Turn $100 into $1,000,000: Earn! Save! Invest!, was brought to you by James McKenna and Jeannine Glista. They are the folks behind the Emmy-award winning Biz Kid$ financial literacy program. They have a passion for teaching kids about money and making their book unique and entertaining to middle-school tweens.
Let Kids Make Their Own Financial Choices (And Mistakes) When The Stakes Are Low
Kids are ultimately going to need to know how to handle their own money when they get older. It’s better for them to learn when the stakes are low, making $20 mistakes versus $20,000 mistakes when they’re older.
Not expecting their parents to buy them whatever they want is often essential to a child’s overall healthy development. Once they realize they can buy items just as easily as their parents can, many kids will gain a tremendous amount of satisfaction and enjoyment from their newfound financial independence and power.
Get Them Use To A Budget
To create a budget with your child, the first step is to focus on explaining income. Next, have your child subtract their expenses from their income. If the number is positive, congratulate your child and explain they have enough money to meet their needs and wants. If it’s negative, explain that they will need to earn more income to meet their goals, or that they need to cut expenses.
Instill a Habit of Saving
Your kids’ early interactions with money will likely involve spending. Help your kids get in the habit of saving by giving them a piggy bank or savings jar where they can deposit coins or cash
Create Opportunities to Earn Money
Kids need to have money of their own so they can learn how to make decisions about using it. An allowance can accomplish that. However, you should consider requiring your kids to do certain chores to earn their allowance. “Just about everyone values money they earn differently than money they receive
Define Wants vs. Needs
Help your child understand the difference between what they want and what they need so that they can prioritize how they spend their money.
Set Budget / Financial Goals
Encourage your child to identify a goal that costs money like buying a new video game or going to an amusement park. Work with them to design a plan on how much they need to earn each day or week to achieve their goal. Then, help them create a chart that keeps track of the money your child earns.
Teach Kids How Their Money Can Grow
Saving money is a great habit. But if you want your kids to learn how to truly build wealth, teach them about investing. If you don’t understand investing well, you could give your kids a book that explains how it works. You can help children get started investing by opening a custodial account
Model Good Financial Behavior
Just as important as the lessons you teach your kids about money are the ways you discuss and handle money when you’re around them. If you want your children to develop good spending and saving habits, they need to see you making smart spending and saving choices. In short, practice what you preach.