We’ve all heard the quote from Benjamin Franklin, “a penny saved is a penny earned.” This expression is even truer in today’s volatile economy. Wise financial planning encourages wise spending and saving for the future. Learning smart spending habits can have a profound impact on a young child’s life. The financial lessons children learn today will last well into adulthood.
According to a recent survey by T. Rowe Price, a global investment organization, 48 percent of parents indicated that they are having more discussions with their children about money, saving, and spending than in years’ past. There are many simple ways to incorporate financial lessons into your child’s everyday life. The financial experts at Money Management International offer the following tips in raising financially smart kids.
Turn grocery shopping into a teachable moment. This is a great opportunity to teach kids about comparison shopping. Teach children how to shop by value rather than brand.
Remember to always shop with a list. Shopping with a list helps children understand how prior preparation can lead to great savings in the end.
Give children an allowance. There are differing opinions on whether or not to give children an allowance. While some may consider it “spoiling” kids, giving children a regular “income” can be a great opportunity to teach them the basics of earning, spending, and saving. Parents can also use an allowance to help children learn the difference between wants and needs.
Help your child open a small business. During the warm summer months, lemonade stands are common in many neighborhoods. This is a great way for young entrepreneurs to learn financial skills. The adventure of starting a small business is a great financial and confidence-building lesson for kids. Children learn how to set and achieve goals, understand profit and price, and further develop basic math skills.
Open a checking/savings account for your child. Many banks and credit unions offer parents the opportunity to open an account in their child’s name. Owning and maintaining an account helps children learn important life skills. There are many ways to teach children about money.
The most important thing parents can do is to communicate with their children about managing money and budgeting. Parents should offer several examples of how money is earned and give children an opportunity to help decide how it is spent. And, most importantly parents need to educate children about the dangers of overspending, borrowing too much, and paying high interest.