If you know me well personally or are a long time Mom Knows It All reader you may recall that we have no credit cards. We did have one or two many, many years ago, and learned quickly how tempting having credit can be and how easily it can be damaged. We are working class people. We don’t make a ton of money. We try to pay the bills, sometimes that happens on time and sometimes it doesn’t. Leftover money and savings are basically the same thing – nothing. Our lifestyle now is simple. If we can’t pay for it now we probably can’t afford it or have it. Emmy sent me her thoughts on teaching kids about money. I know a number of you have children and credit cards, so I’m sharing the info with you here in case you find it useful.
7 Tips to Teach Kids About Money
How many credit cards do you have in your wallet? How many unpaid bills do you have in your mailbox? We all have it, and we all wish we could ignore it and make it go away. What happened to the days when we had no monthly payments to make and no debts creeping up on us? Those were the days. Life was much simpler. The paycheck came in, then we cashed it and went shopping.
That is often the case with many teens today as well. They have no bills to pay each month, so when they do get their paychecks they don’t learn the value of saving. Instead, they learn how to go out and spend. These bad habits begin to perpetuate and grow as those teens become adults and enter the world on their own. Before they know it, they become like the rest of us. Buried in bills.
It’s time to lead by example and teach them how to spend and save properly.
1) Teach the value of the dollar. Starting this with younger kids garners the best results in adult life. If your child wants something (whether it’s candy or that newest toy), make them earn it. Have the child do chores for an allowance. When the allowance is paid, teach them to save at least half of it and keep half for spending. If the item they want costs more than that allowance, make them save money for it instead of patting them on the back for saving money and giving them the rest. It teaches kids the value of the dollar.
2) Learn to bargain shop. This is a great way to lead by example. Anything that you intend to buy, shop around for the best deals and make sure your child sees you doing it. This helps them better understand that impulsive purchasing is bad, and it teaches them how to save money by looking for the best deal. Bargain shopping doesn’t always mean going second-hand. You can still get something brand new for a great price by couponing and shopping around.
3) Pay the bills together. While your child isn’t going to help you pay the bills, there is no reason they can’t sit down with you to pay them. Not only will they better understand where the money their parents make goes, but they will also get to practice their math skills too! Showing them a budget for the bills as you write the checks will better teach them how to budget in their own future as well.
4) Don’t be afraid to show them credit card bills. Some parents might call this a scare tactic. Let your child go to the store with you to use the credit card to buy something, then when the bill comes sit down and explain how the bill works. Make sure they see that there is interest on the balance of the bill that isn’t paid off. This may not work for younger kids, but teens will get the drift really fast.
5) Get help when necessary. No one is perfect. Sometimes things happen that we just can’t budget for and we end up with bills that we just can’t face. Use this opportunity to explain to your child the importance of having savings. Read reviews on credit repair services on sites (http://www.creditrepair.com/reviews) to find a way to get yourself back on track. Let your child know that there is no shame in getting help when things do get out of hand.
6) Teach them that credit cards are not cash substitutes. While it is okay to charge to a credit card if you have the money to pay it off, it is important for kids to understand that credit cards do not take the place of cash. Make sure that they understand that credit cards are like loans, and the longer it takes to pay it back to the bank, the more that item will cost in the long run. Let them know the ten things they need to know about credit cards.
7) Make them take responsibility early. Kids who are taught as teens to take on some of this responsibility are more likely to have financial success in the future. This means having teens get a part-time job to pay their own share of the cell phone bill, gas, and car insurance. A great way to get them to understand the challenge that these monthly bills can present is by making them save at least half of their paycheck before paying bills.
Don’t wait until it’s too late. Teach your kids to save money and take financial responsibility now.
Great tips! I think it is never too young to teach children the value of money.
I really need to start teaching my boys more about money because they think it just grows on trees!
I think my kids started to get an understanding of how important it is to watch your finances when we were digging ourselves out of debt. It was excruciatingly difficult and we suffered a lot to make it happen. But they learned how important it is to not overspend.
I am proud to say that my kids are great with money!
These seem like great tips to store away for my little ones. We just got my 4 year old a piggy bank and we’re starting to teach the idea of spending, saving, and giving.
We are on a strict budget so the kids know that they can’t get things when they want but have to wait and earn them.
These are wonderful tips! You can never start too young!
Kids do talk so giving them financial information can let everyone know your finances. So beware.
Wigth that said teaching the value off a dollar means teaching them how to use it and the consequences of all gone. Too many parents float loans at every whim so their children never experience want. I took my kids shiooing00taught them toi unit price, estimate costs, and leave some things for another day. They had chores; they had allowance. Responsibility and gopod choices go hand in hand.
Great tips! Our oldest is slowly learning about the value of money vs. gas guzzling truck now that she’s learning to drive.
The credit card tip is so true. I got my first credit card when I was in college, and it was the biggest mistake of my life!
You couldn’t be more on target with this post. Kids need to learn the importance of financial responsibility as soon as they are able to do math.
Those are great tips! I have just recently started a system with my almost-5-year-old where he can “work” to earn money. It’s been working really well and has already taught him some lessons.
We’re implementing quarter chores this week so the kids can earn, save, and spend themselves.
My boys already know about bargain shopping. Often times they will pick something up and say, “is it on sale mom?” They know I don’t buy things that aren’t on sale.
These are some awesome tips. I’ll have to keep them in mind the next time I’m paying bills.