Tuesday, January 10, 2012

Teach Your Child Good Financial Skills

Teach Your Child Good Financial Skills

It’s a scary world out there, and money is one of the scariest things about it at the moment. It can be natural to want to protect your children and avoid scaring with them with economic doom and gloom but you do need to prepare them for adulthood, and financial management is a big part of this.

Setting goal orientated tasks for your child to earn their allowance, or bonus pocket money, is the simplest way to make them get used to working for money. They’ll appreciate the fact that cash needs to be earned, and place a higher value on it.

Take an interest in their spending, and if they see something expensive that they want discuss with them how they can save up their allowance to pay for it. However, don’t micro-manage them. Let them make decisions and mistakes. One impulsive bad spend that leaves them impoverished for a week or two can be enough to encourage them to be more sensible in future.

Talk to them about your finances and the economy so that they gain some understanding of what adults do. (It’s important though that you don’t obsess about it in front of them or constantly remind them how much things cost, especially when it’s things you bought for them. It’s your duty to spend money on them, the child shouldn’t be made to feel guilty or neurotic.)

Children these days spend a lot of time online, and when people start internet shopping it can seem like you’re playing with fake money. Teach them safe online shopping methods by helping them to identify safe ecommerce sites (do you know how to spot a dodgy site? If not get yourself on Google for some tips). Giving them their allowance as a pre-paid voucher or card that they can use online will help them to learn that when you spend online, it is real money, but also means that they can’t overspend.

Websites like Planet Orange or The Mint are designed to help children appreciate financial management in a fun way. Encourage them to use these.

Remember – most importantly, practice what you preach. Let them see that budgeting is a normal thing to do, and also a simple thing to do. If you show that it makes you stressed or that you struggle to curb your spending you could make them stressed or doubt the benefits.

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