Setting positive financial habits start with you. Children will learn from you and how you manage your money. Even before your kids go to school, they already know a little about money, so the moment your children begin handling money is the time to begin teaching them how to handle it wisely.
Allowances are a good way for children to begin learning how to save money and budget for things they want.
When it comes to giving children allowances, some good rules of thumb are to:
- Decide how allowances are earned, such as by doing household chores.
- Discuss with your children how much of the money can be spent (and for what) and how much they should save.
- Make “allowance day” like a payday by giving the same amount on the same day each week.
- Consider “raises” for children who manage money well.
Take it to the bank
While piggy banks are a great way to start teaching children about saving money, opening an online or in-person savings account at the bank will introduce them to the concepts of earning interest.
Shopping that makes sense
TV commercials and peer pressure give children plenty of ideas on how to spend their money. Teach them how to compare items by price and quality. Most importantly let them fail so they learn from it.
Plan for tomorrow, today
As children get older, their focus will be on saving for larger goals, such as clothing, gas, cars or college. This is a great time to introduce them to pre-loaded debit and credit cards for them to manage their spending habits. Also, introduce the principles of investing. Helping older children learn about topics like risk tolerance, market volatility, and asset diversification may prompt them to take charge their financial future.
Wickham Financial & Insurance Services is a Registered Investment Adviser. The information contained in this article is solely for informational purposes. Advisory services are only offered to clients or prospective clients where Wickham Financial & Insurance Services and its representatives are properly licensed or exempt from licensure. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. No advice may be rendered by Wickham Financial & Insurance Services unless a client service agreement is in place.