It is crucial that your child has an idea of personal finance at a young age. You want them to grow up knowing how to pay their bills and understanding what it means to be in debt. Here are five ways you can teach your child about personal finance that can also be fun and memorable.
1. Take Them Grocery Shopping
Encourage your teen to participate in a “grocery day” with you to better understand financial literacy. Sit down with your child before shopping and go over your budget and your list. Explain to them how much you are looking to spend and the food you need for the week/month. Have them help you coupon clip and try and make a goal to save a specific dollar amount. Take them with you to the store and have them help you look for each product. Make sure you stay within budget; you might want to consider bringing only cash with you so you don’t go over. You can turn this into a fun adventure! This can make grocery shopping fun for the both of you.
2. Invite Them to Help You Organize Your Receipts
After your holiday shopping, you might be stuck with a lot of receipts and bills. Invite your child to help you organize your receipts to understand how much expenses cost. Your child may be surprised to learn how expensive things can be. This might teach them to think twice before asking for luxury items next year. Your child also may be interested in holding a job so they can pay for more discretionary expenses on their own. You could even teach them a little about tax on products when going through your receipts.
3. Set a Short-Term Savings Goal
Sit down with your pre-teen and ask them what their short-term goals are. They might not have an idea and that is OK. You might want to go over some of your short-term goals with them to help them better understand what they want. For example, maybe you want to plan a family vacation the following year or maybe save up for a new TV for the family room. Pick a goal with your child and create a “savings jar” for that goal. Invite your child to contribute when they can. It can be very rewarding to reach your goal, especially if you reach it before you expected. Your teen will get motivated to help you — especially if it means they will be getting a vacation out of it!
4. Give Them Rewards Instead of Allowances
If your pre-teen doesn’t have a job, you might be giving them an allowance to spend on discretionary expenses. If this is the case, you might want to switch the allowance to a “rewards allowance.” Encourage your child to help out around the house with chores such as, cleaning, taking out the trash, doing the dishes or even helping with dinner. If they meet each chore every week, you can reward them with an earned allowance. They will not only want to help out more, but they will realize you have to work for your money!
5. Have a Discussion
You can teach your child about money through games and lessons, but why not sit down and ask them what they know already? You might want to consider sitting down with your pre-teen once a week and discussing their financial goals, wants and needs. (You can track your financial goals, like building a good credit score, for free every 14 days on Credit.com.) Explain to them how much things cost and the importance of a job. You can even teach your child about money each time you pay your bills. You don’t need to discuss numbers with them, but instead show them how to use a check, bank account and credit card. They will thank you later.
Image: Svetlana Braun