As a parent you play a large role in helping to form your child’s money habits. If you want your child to grow up with healthy money habits, start as early as possible. The following are four tips that will help you raise money responsible children.
1. Give your child an allowance
Receiving an allowance is your child’s first experience with having money of their own. Learning how to deal with money from a young age is crucial to financial success in the future. They will learn that when they spend money they will need to begin saving again for the next thing they want. Children as young as five years old should begin receiving an allowance and start learning how money works. Dealing with an allowance is also a good way for your child to practice his math.
2. Promote saving money from the start
As soon as your child begins receiving an allowance they should learn the importance of long-term saving. If your child receives a five dollar allowance, don’t give them a five dollar bill. Instead give them small denominations that make it easier to divide the money between savings, charity, and pocket-money. Discuss with your child the reasons why saving money is important. They might not understand at such a young age, but as they get older and see their savings continue to grow they will be impressed with how much they’ve managed to save. Teach your child the difference between long-term savings and short-term savings. If your child wants a toy that cost $50, they need to save from their pocket money instead of withdrawing from their long-term savings.
3. Allow your child to earn extra money
A child shouldn’t be paid for doing things such as helping with dinner, setting the table, and cleaning their room, but if they want to earn extra money by doing bigger chores such as washing windows or vacuuming one floor of the house, or washing the car, they can do those types of chores. This is better than just simply handing them more money when they ask for it. They will learn that to get the extra money they want or need, they have to work for it. This will help to instill a good work ethic and respect for money in your child.
4. Be a good example
Telling your child about money and how to manage it is one thing, but seeing you taking your own advice is equally important. Take your child to the bank with you and let them see you pay bills and add to your own savings account. The best role model for your child is to not keeping all money discussions private. Let your child hear you discuss needing to save money for the new car your family wants and how you can save money on the week’s groceries. When you shop, compare prices with your child and teach them how to find the best value. Teaching your child about money from an early age will set them up for financial responsibility for their entire life.
Yasmin ‘Yas’ Hurston is the Executive Producer of OnPoint! Experience radio show and President of SAY YAS Productions. In addition, she is a football mom! Check out Yas Hurston’s blog Single Mom Chronicle at http://onpointradioshow.com/blog/