Do you feel like you are your kid’s ATM machine? Does your child spend faster than he saves? Do you worry that you’ll still be delving out an allowance to your child when he is 45 years old? If so, you’re not alone.
Some of parents’ biggest concerns center around their kids’ inabilities to handle money and it is a legitimate worry.
How a child learns to save and spend in the early years has enormous impact on his future success. And research also shows we’re not doing such a good job in teaching our kids basic money management skills. Consider these facts about our kids spending habits.
Scathing Stats About Kids’ Spending Habits
Last year, 180,000 U.S. kids aged 18 to 24 declared bankruptcy.
Less than half of parents surveyed said they teach their 11 to 14-year-olds how to keep track of their expenses or set a budget.
One-third of 12-year-olds don’t know that paying by credit card is a form of borrowing (unless you pay your bill in full every month).
Four out of 10 children age 12 don’t know that banks charge interest on loans.
The truth is we can begin to teach our children money management skills as early as 3 and 4 years of age, and those lessons don’t have to be difficult. In fact, the best way for kids to learn is by taking advantage of those simple everyday real life moments like watching us at the ATM machine, paying our bills, balancing our checkbook, deciding our money budget, talking through our spending decisions.
Those lessons will take a bit more patience and persistence, but learning positive spending habits, financial wisdom, and good money management skills are crucial for life. And that’s exactly why we must parent for this kind of change.
Here are simple solutions to help your child learn good money management habits to give him a more financially secure future.
Explain How Money Works
Start money lessons when your kids are young. Take them with you to the bank so they see you have to put money in to take money out. Let them play store with toy cash registers and play money.
Put price tags on household items then help your child figure out the cost to “purchase” each item. Give your preschooler a clear small jar (baby food size) that she can save coins and “watch them grow.”
Stress that she can buy something special when the coins reach the top. Let her do simple spending at the store where she has to count out the correct amount for candy or inexpensive toy.
Use Real-Life Examples
Take your child to work. Show your daughter how you balance your checkbook. Talk to your son how your credit rating is checked before purchasing a car. Show your kids the household bills so they know how much electricity, gas, water, phone and cable cost. You don’t need to reveal your income or savings, but you should use real opportunities to help your child understand money.
Read more: Dr. Michele Borba