Personal financial success in life can only be achieved through proper management of your finances. It is important that a parent educate their children, starting at a young age, to understand their personal finances and how to manage them correctly. This will set the child up for success later in life. There are many ways to teach a child about personal and consumer finance and how they can manage their own and we will address a few easy ways to start in the following article.
The most obvious way to start to teach your child about personal finance is to give them an allowance. One of the best things about having an allowance is that it teaches children about finance and helps to control their spending. It makes them evaluate and place determinations on which of the many items they want to purchase is the most important. It can also teach your child the value of the items he owns, as he will associate the cost with the item.
There are lots of ways to teach your child about earning money and you can start very young. Make sure that you can set up a "time-sheet" for your child, even if you are paying them in piecemeal for tasks. This allows a child to begin to associate and understand that money is a value placed on the time that is spent earning it. As the children get older, you can help them start small businesses of their own, such as lawn care services. This also can give your child confidence and self-esteem in life by showing that success comes to those who earn it.
You should start a savings account for your child just as soon as they can add two plus two. Starting early and establishing correct saving habits are a lesson that will serve your child very well in the years to come. It shows them that saving money makes them money. It can also be a great way for them to start saving for the big items that come up in life, like a car or car insurance when they are a teenager. Having a savings account is also a way to teach that you should have a cushion to deal with unexpected expenses that come up in life. Having that cushion can save you from financial ruin.
Take your child to the grocery store with you and don't just stick them in the cart and ignore them. Grocery shopping starts before you get into your car to go to the store. Walk them through reading sales ads, clipping coupons, and planning menus so as to stick to a budget. You can show them price per volume values and where to look for the best deals, like the bottom shelf. It is a great opportunity for you to teach them about advertising and how marketing affects spending.
By following some of the techniques listed above, you will be able to give your child a great head start in life by giving them the tools needed to handle their consumer finances as capable and mature adults.