Monday, February 8, 2010

Teaching Your Kids About Money

Most education systems spend lots of time teaching kids how to grow up and make lots of money, but almost no one teaches these kids about what to do with the money once they get it. As homeschoolers, we have a unique opportunity to prepare our little ones to avoid the financial problems that so many people face in life.

Here are some ideas to get your children started on the path to financial security.
• Wait to buy—if your child wants something that you consider a big purchase, instruct him to wait a few weeks to buy it. The time will either confirm the desire or show your child it wasn’t that important. This is good training for later in life when the desired item is a new car or television—purchases that shouldn’t be made on impulse.
• Start saving young—the real money magic happens with time. The more years you have to grow what you’ve saved, the greater the benefits. Encourage your children to save 10-20% of any money they receive in an account for their future (how far in the future is up to you). If they start saving with their first paychecks and make that a habit, they can avoid many of the money woes we see in the world around us.
• Do your homework on the difference between investing and saving.—Look this up as a family. How much of a return can you get from different investments? Savings accounts? The difference in the rate of return can mean thousands of dollars over time.
• Let your children participate in the family budgeting process.—Children need to understand that not all money is spent on fun stuff. The sooner they are exposed to taxes, insurance, utilities, mortgages, etc., the more comfortable they will be with budgeting for them.
• Remember to “Pay yourself first.”—This is not about selfishness, but self-discipline. It just means putting money into savings first and learning to live off the rest.
• Model and encourage tithing
• Start savings/checking accounts young.—The more practice a child has balancing a checkbook, and keeping track of savings, the more prepared he will be to handle money in the future.
• Give your children an allowance.—To learn how to handle money, they have to have experience with money of their own. My children learned to save for toys, separate money for their tithe, and regret purchases. None of these l

No comments:

Post a Comment