In these days of financial stringency and the recession nowhere near over yet, the imperative to teach your child about money is ever stronger.
At times like the present when the global economic slowdown that lessened the spending power of most and caused layoffs the world over, children need to understand more than ever, how finances, budgets and basically how money works.
There are lots of ways in which you can introduce the concept of money and teach children about it.[Teaching Kids about Money]
Let them observe: Take them shopping, take them to the ATM and the bank let them see practically how money changes hands and how it is recycled within society.
When you go to the supermarket, explain why you choose a particular brand or a particular size of packaging for reasons of economy or quality.
If you have an orderly monthly budget, explain that to your child with some emphasis on priorities and how when the money runs out the luxuries and treats will have to be given up in favor of the necessities.
Give them some or let them earn some: A basic age appropriate allowance is of course something that will give the child the concept of their money and how it is to be spent, but that will increase the value of money and instill respect for it is if the money is earned.
It isn’t just a paper round or mowing the neighbor’s lawn, the children can be given bonuses for keeping their room clean or doing special chores around the house or helping with the family business. Understand though that this should be used with care, and cannot be allowed to become a bribing mechanism.
Introduce the idea of saving: At a conveniently close by location, you can open a savings account for your child, which introduces the idea of savings at an early age.
Ideally the account should be of a type that requires no minimum balance to be maintained and does not levy a fee. With the internet offering online banking options pretty much universally, this has ever been simpler. Also introduce the concept of investments that grow money and the concept of earning interest.
It can be fascinating to a child to learn that money makes more money and that the more you are able to save, the more you have. This way a child can be encouraged to reduce superfluous expenses in favor of the more important things.