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One of our hardest jobs as parents is to teach our children. Over the course of the first 18 years of their lives, we’ll teach them to do everything from take their first steps, to driving a car, to picking the right relationship. One of the things that a lot of people forget to teach them though is how to save. This results in adults who don’t know how to manage money, get themselves deeply in debt and sometimes end up failing at making it on their own. (I’ll admit, I was once one of those people). Teaching your children to be financially smart is not a “want” to in life…it’s a must do.
If you’re like I once was though? You’re at a loss on how to teach them. Here’s what worked for us:
Make your kids earn their money – I’m not talking about an allowance. I’m talking about making them work for their spending money. Children are not born knowing the value of a dollar or how it correlates to work. If they’re not made to work for it (even a small amount of their money), they’ll never learn that in this world, to earn, you have to work. To teach them, give them chores or if they’re old enough, make them get a job. Most places will hire somewhere between age 14 and 16 and there is nothing wrong with making your teenager get an after school job. You’re not a mean parent because you make them work..in fact? It’s the other way around. You’re showing them love by teaching them what they need to know.
Make them Save – Making your kids earn all or a portion of their spending money is great, but if you aren’t making them save some of it? What are you teaching them? Your teaching them instant gratification…and let’s face it. Life, for the most part, is not about instant gratification. Life is full of waiting, especially if you’re wanting a big ticket item. Instant gratification from a financial standpoint leads to large credit card bills, home loans that can’t really be afforded and in a lot of cases, bankruptcy.
What leads to smart financial choices? Saving and waiting until you can afford the item(s) you want. With kids, you can use something as simple as an old milk jug for them to save or you can actually get them a bank account. We personally use the ING Kids Savings Account for the Monkey Child. We opened it with $3.00 and it’s been great. She loves that she gets her own account to log into and I love that no decisions (withdraw, deposit, etc) can be done from her account and has to be done from the parent account.
If you’ve got a teenager, you might want to check out the ING Money account. It’s the same as the Kids Savings Account (in how it’s managed) but it also has a debit card that your teen can use to learn how to manage a real checking account. Accounts like these can be fantastic tools in teaching your kids life long lessons.
Want vs Need - When Little Susie has finally earned and saved enough to get that new toy iPad she wants, question her. Never let your kids just purchase what they want just because they have the money. Ask her if she really needs it or if she wants it. A lot of the time (not necessarily with an iPad), the answer you’ll get is that they want the item in question. Buying wants is 100% fine, but a lot of the time, you’ll find that the child/teen in question will hold off on the purchase in order to save more money because it’s a want vs a need.
Set a Good Example – You can not teach your child good financial skills if you yourself don’t have them. If Mom and Dad are $150,000 in debt (minus your mortgage), are always blowing their money on wants vs needs, don’t earn their money or don’t have a dime in savings, why should your children? Lead by example and get your own finances in order so that your kids can learn from you and how you act. This above all, is probably the most important factor to teaching your kids.