We all want our children to grow into successful adults, but while we tend to focus on pushing them to achieve good grades and excel in extracurricular activities such as sports and musical instruments, according to educational group Money Savvy Generation, if we are neglecting to teach them about financial responsibility then we are failing as parents.
CEO of Money Savvy Generation, Susan Beacham is dedicated to helping parents to equip their kids with the ability to handle their own finances as they grow.
We fail as parents if we do not arm our kids with the ability to manage money as strongly as we do with other life skills,
says Beacham. She has recently shared with parents her top tips to build their children’s money management skills.
First of all, she suggests that children should help with making the family budget. Children can be pretty clueless about where family money actually goes which is why they are prone to trying to negotiate the purchase of expensive items. If you have kids participate in a monthly budget meeting they will soon learn to see the bigger picture. Showing children the monthly bills you have to pay for can be useful in teaching them about the difference between want and need.
Another piece of advice Beacham has to offer is to include children in buying groceries. By taking your child with you when you go shopping you can give them a practical lesson in both budgeting and math.
Try giving them $15 to purchase a meal for the family. They will have to decide on a meal which is both nutritionally balanced and within their budget. This can help them to realize just how expense it can be to feed a family.
Children can also benefit from learning how to pay the bills. It can be a useful lesson to show teens how to go about paying monthly bills. Show them a bill such as the utilities bill and help them to find the amount owed, the due date and how to make the payment.
Show them how to write and mail the check or how to make a payment online. The physical act of sending money sinks in much better than simply telling them you have to pay out $100 a month to cover a particular bill.
Beacham also recommends that if you give your child an allowance then you must also teach them to manage it by themselves. This holds true whether they get a dollar or $20. Teach children to spend and save by helping them to budget their allowance.
For example if they have $20, encourage them to spend $8, save $6 towards a short term goal such as a computer game they would like, save $4 towards some larger long term goal and even suggest they donate the remaining $2 to charity. This will teach your children to manage money and to help them form sound financial habits.