In this age of consumerism, credit cards and instant gratification, it can be challenging for children to learn money management skills.
" Financial responsibility is a life lesson our children can't afford to miss," explains Jeanette Pavini, Consumer Savings Expert at Coupons.com. "Since it's not exactly required curriculum in most schools, it's up to parents to teach kids how to handle money." Pavini is sharing her tips on raising money savvy youngsters.
6 Important Lessons for Financially Fit Kids
Lesson 1: Some chores should simply be part of a child's household contribution.
Kids shouldn't be paid for routine chores like making the bed or doing the laundry. But why not pay youngsters for extra jobs that can save you time, like washing the car or mowing the lawn? Show them the value of hard work. Allowance should be earned, not expected.
Lesson 2: Younger children may be more motivated by a token system rather than a cash allowance.
Kids can earn tokens or points for jobs around the house, and then "cash in" their rewards for extra computer time or a trip to the movies. Check out Pinterest for chore chart ideas. For tech savvy kids, download a chore management app where you can assign chores and track reward progress. Chore Pad and iReward Chart are popular with parents.
Lesson 3: Sometimes you have to save up for things you really want.
Sending your child off to college in fall? If you give them spending money, deposit a set amount each month so they can learn to budget. Encourage them to track spending with a spreadsheet or at a site like Mint.com.
Lesson 4: Money doesn't grow on trees. Learn to budget.
Turn grocery shopping into a savings lesson. Make a list with your kids, clip coupons at sites like coupons.com, look at ads and compare brands. Take the amount you save each shopping trip and set it aside for a vacation or special family outing. You can even use apps like Grocery iQ to make it more fun and high-tech.
Lesson 5: Finding simple ways to cut back can lead to big savings.
Encourage kids to clean out their room and gather all outgrown clothes, unwanted toys and electronics. Then take them to a consignment or resale shop where they can sell items or receive a credit towards a new purchase.
Lesson 6: One man's junk is another man's treasure.
Don't be afraid to charge your child interest if they want to borrow money for a big ticket item like a car or video game system. That way they can safely experience the concept of credit. By paying interest, kids will learn that there's nothing free about buying on credit. Interest adds up and overspending can be perilous.
Q & A: Kids and Money
GalTime: In this age of instant gratification do you think it's possible to teach kids about saving money?
Jeanette Pavini: It is important for parents to teach kids the value of a dollar. You are actually doing your kids a disservice by not; children become adults eventually and they need to be financially responsible. The best way to teach kids to save money is to have them work towards a goal. Maybe it's a toy they want or an outing they want to take, but if they save the money for it, it will be better appreciated and more valuable. Hard work first, reward after.
GT: What is the biggest obstacle parents face when trying to educate their children about money?
JP: The biggest obstacle is finding the time to educate children. It's so much easier to just pay for it and not deal with the complaining or explaining the importance of saving money. Parents need to set the time aside to lay ground rules and educate.
GT: Why is it so important to teach youngsters about giving?
JP: Children appreciate what they have even more when they experience seeing what it is like for someone who doesn't have what they have. It's so important to teach kids about giving back. It makes them more aware and charitable which is a great quality to have, and one that our society as a whole can benefit from.
GT: What if you kid saves their money and then wants to blow it in something you know will immediately fall apart... should you let them make money mistakes?
JP: Some of the greatest lessons in life are learned not by something we hear, but rather something we experience. Letting kids make minor financial mistakes can teach them lessons that will help them with bigger financial decisions in the future.
GT: What if your kid's friends are getting all sorts of pricey items (like an iPad or cell phone)... how can you explain that to your children?
JP: This is an opportunity to have your kids learn to save and earn money so they can reach a goal. Explain that there are a lot of expenses that go into being a parent and right now you have to take care of those financial responsibilities and staples before you buy a pricey item. Go over the expenses with your kids. Tell them if they can think of creative ways to help you save on those expenses they can have the money they save you.
For example, maybe they can help you plan the weekly dinner menu with items that are on ad in your grocery store circular. Then find coupons that save even more. When you get the receipt it will show you how much you saved and give your kids that amount or a percentage of that amount to save towards their goal.
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