Lori Mackey of Prosperity4Kids recommends the following tips help your kids develop smart spending habits and become financially stable adults.
Engage kids early: Children are introduced to concepts like sharing, caring and friendship in Kindergarten. How about introducing the concept of money starting in Kindergarten?! When children start saving and investing at an early age, they are almost guaranteed to be secure in retirement. Start teaching them now how to save money!
Kids can earn profit and clean up: Free, family-friendly local classifieds site, Kijiji.com, found the average household has 35 unused items worth about $670. Now is a perfect time for some spring-cleaning and allowing your kids to earn some money. Help your kids identify the unused household items in your home, garage and even outside in the yard and list them on Kijiji. This will also show your kids that unused items still have value and can be put to good use, whether they are sold or donated.
Pay an allowance the smart way: Allowance can teach children how to be responsible, independent and introduce them to the wonderful world of money. Consider what you are already spending on your child, and then allow them to earn that amount. Your child will use the money to purchase the items you used to buy for them. I guarantee they will make better choices with their money versus your money.
Never spend the whole dollar: Now that your kids are earning money, teach them how to spend it. Teach the 10/10/10/70 concept, for every $1:
· 10% is set aside for savings
· 10% is set aside for investing
· 10% for giving
· 70% is left for your child to spend
Research, compare and delay: Between text, the internet and fast food, children today have little experience in delayed gratification. By teaching your kids to research the items they want, compare prices and read the comments and ratings, children will start to make educated decisions instead of spending on impulse.
Let your kids make money mistakes: Let your child spend their 70% on what they want, as long as it’s inline with the family values. It may be hard and you will have to bite your tongue, but the more mistakes they make with $10 toys that don’t make it home, the more your child will learn the value of their money. Your child will soon learn to make quality purchases.
Watch what you say: When talking to your kids about money keep it positive. Never say, “we can’t afford it” or “we don’t have any money” even if it’s true. Try to use a positive response like, “It’s not in the budget right now” or “we are making different choices with our money right now.”
Expand the life cycle: The wealthy did not become wealthy by being wasteful. Teach your children to use items until they no longer need them, not because their best friend just got the latest and greatest. If your child does want to purchase a new bike using their own money, help them list their old bike on Kijiji. The sale will help them cover the cost of the new bike and expand the life cycle of the old one.
Talk about it: Parents need to incorporate money lessons into everyday activities. Play Monopoly with your kids and encourage your kids to ask questions about money. If you don’t know the answer, research it together! The more you talk about a subject the more comfortable and educated you and your kids will feel.
Teach budgeting: No one likes a budget, but everyone needs to know where the money goes. Have your kids account for every penny that comes in and goes out. Teach your kids to keep receipts and create a log of all income and expenditures. Practice this for a while and like everything else it will become natural.