1.
Give Them An Earned Allowance
One of the best lessons in money a child can learn is that
in order to make money, it has to be earned. Because children generally have
little concept of how money works, having them do household work or complete a
set of chores in order to earn money will help them begin to understand the
process.
2.
Loans & Credit
With older children, it is important to sit down with them
and talk about loans. Often, kids see their parents use a piece of plastic to
pay for purchases, and they have no concrete understanding of how that works.
In the future, with their first credit card, if they believe they can “buy now,
pay later” on their own time frame, they will have a big reality check when the
first bill comes due. Instead, sit down and explain to them that credit cards
should be used wisely, and that in order to stay on top of payments, only
purchase what you can pay off.
In terms of loans, teach your kids about the various loans that
are available, such as mortgage loans, car loans, title loans from companies
like TitleMax, business loans, etc., and
what they are used for.
3.
Help Them Be Entrepreneurs
While an allowance does offer children a weekly income, when
they are excited over an item they want to purchase, help them to come up with
creative ways to earn money.
Start a craft or baking business with them. Thanks to
Pinterest and Etsy there are endless websites to making household items or
delicious recipes that can be sold in home as a business.
If they are too little to promote themselves, tell friends, family, and neighbors,
and even try getting them sold at a craft fair or farmer’s market.
Or, have extra chores around the house ready for allowance
“bonuses.” For every extra chore they get an extra amount added to their weekly
allowance.
4.
Don’t Buy Them Everything
Parents have a responsibility to purchase necessities for
their children. But, when it comes to the extras, parents should have their
children purchase their own wants. When children have to work and save their
money for a new toy, movie, book, or special treat, it teaches them to spend
wisely rather than frivolously.
5.
Encourage Them To Save
Help them to understand the importance of saving money by
having them save for something that is important to them. The will learn that
if they spend their money right away, they will never have enough for something
larger.
It is never too early for children to understand the value
of a dollar. These lessons will stick with them as they grow into adults.
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