We are excited to have a guest post from David Bakke -- a Kiva Contributor from the blog Money Crashers Personal Finance. He lives with his young son in Atlanta, Georgia, and writes about money management and saving tips on Money Crashers.
It's an unfortunate fact that our public school system does little to teach children about money and finances -- and that's unlikely to change any time soon. Therefore, as a parent, that responsibility lies with you and you alone.
Teaching your children about money at an early age is a priceless gift, as it puts your kids on track to make intelligent, educated financial decisions as they grow older. Here are five tips to help you impart sound financial advice to your kids:
1. Speak to Them on Their Level
Your message is not likely to sink in if you're not talking to your children at their own level. When you teach them money lessons, sit together on the floor or kneel down next to their desk.
2. Use Concrete Examples
If you want to get an idea an idea across, use examples that your children can relate to. For instance, use your own credit card statements - even if you currently carry a hefty balance, this is a great way to teach the dangers of credit card debt. If you pay your bills on time, you can proudly point out the $0 next to the "interest paid" line.
3. Train Yourself to Say No
If you say "yes" to your kids every time they want a new toy, snack, or anything else that costs money, you are impressing upon them that reckless spending has no consequences - which couldn't be further from the truth. Children need to understand that there are limits to spending, and while you don't want to cease all purchases, exercising restraint demonstrates a valuable financial lesson. Consider establishing a monthly toy budget, and let your kids make their own purchasing decisions, keeping them updated throughout the month as to how much they have left to spend.
4. Instill in Them the Desire to Save
If your child has received a sum of money for a birthday as a holiday gift, this is the perfect time to encourage saving. You may wish to take your child to the bank and help him or her to open a savings account, as this is a great way to encourage financial responsibility. The representatives at my local bank all know my son by name, and he loves it when he's greeted each time we go there to make a deposit.
Final Thoughts
If you can effectively teach your children how to responsibly handle money, they'll be able to more actively participate in their own savings for college. This will lessen the burden on you, and can also reduce the amount of student loan debt they graduate with. There are many benefits to teaching your kids about money, and you'll be doing both yourself and your kids a disservice if you don't start now.
What additional ideas do you have for teaching kids about money?
One of the top personal finance and lifestyle sites, Money Crashers aims to develop a community of people who try to make financially sound decisions. Their website strives to educate individuals in making wise choices about credit and debt, investing, education, real estate, insurance, spending, and more.
