Teaching Your Children About Money

Research shows that the average teenager believes that they will earn close to or more than $100,000 a year once they finish college. Yet census numbers show us that the average income is closer to $26,000. With such a discrepancy, it is no wonder our children don’t know the value of a dollar or how to live within certain financial means.

The time to start teaching your children about money is as early as the age of three or any time the children learns to say ‘gimme’. Rather than buying your child a pack of gum, candy or a toy each time they want it, you can use the opportunity to teach them about money. This is a lesson than you can practice all the way into their teenage years.

How do you regulate spending money on your children while teaching them the value of the dollar? Here are a few steps.

1. Include your children when discussing money. Most children don’t understand how much the cost of living is. You can share this information without worrying your child by providing a balanced view of money coming in and money going out. Include your children in decision-making and money management activities. Start a family savings account that will go toward a group event and encourage your children to contribute.
2. Give your children an allowance. The allowance does not have to be tied to chores. Doing this will make the child forgo the chores when they don’t need the money. Having a weekly income that they use for their own spending teaches them how to choose carefully what they want and don’t want. Explain to your child what they must buy for themselves and what you will pay for. Items a child can pay for can include CDs, movie tickets, gifts, and a savings.
3. Take your children to the store. Make a list, set a budget and allow your child to help you shop. They will recognize the value of items and learn to evaluate which items are the most cost effective. This is a lesson they easily can carry into their adulthood.
4. Teach your child how to save up for big-ticket items. When your child sees something he or she wants, make them wait at least a week, teach them to compare prices and shop around. Waiting will ensure they have enough cash and that the purchase isn’t an impulse buy. Who knows, they might change their mind and be grateful they had to wait.
5. Help your child set up long-term goals. Most children don’t think beyond the moment, so work with them on thinking about items they might want for the future – a car, motorcycle, college, etc.
6. Set up a savings account for your child. Take them to the bank and teach them how to add and subtract at a young age so that they can monitor their own bankbook. Show them how the pennies they collect can add up. Teach them to roll coins and add up the value as well. This can be added to their savings account and they will enjoy handling the money.

Taking just these few steps will help your children gain a giant leap in life’s financial game.

Franklin Buck is the friendly spokes person for ThinkCash.com, a company that provides short term loans to individuals. For more information, please visit www.ThinkCash.com.