It is never too early to teach children and adolescents about budgeting and finance. Even the youngest of kids can learn how to manage money in a healthy way. The goal is for them to create habits that move with them into adulthood and ensure they make wise financial decision throughout their lives.
Modeling good behaviors
For young kids, it’s important to model healthy behavior related to money. Take your children with you to the bank so they can begin to learn the process and language surrounding depositing or withdrawing money. Pay with cash when possible so kids learn that money is a means of currency with value. It’s harder to learn this when the adults in their lives always pay with cards. Keep a positive attitude surrounding money and work to not argue over bills or debt. This helps children develop a neutral or optimistic opinion of money, as opposed to seeing it as something that should cause stress or anger.
Needs vs. wants
Helping young kids understand the differences between needs and wants will help them in the future when they’re making spending choices. Many caregivers assume children automatically know the difference between needs and wants, but this is a concept that must be taught. To put it simply, a need is something you must have to survive such as food, water or shelter. A want is something that would be nice to have but isn’t a necessity, such as a new video game.
Earnings and allowances help children and teens learn how to budget. Whether they earn money from completing chores or are given an allowance, having a regular income will help promote financial literacy. These tactics help them understand cash flow and what it will be like to earn a paycheck later. For this to be constructive, the allowance needs to be paid in a precise amount on a consistent…
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