With the current economic climate being one that dumps debt on future generations, there is no better time to teach your children about money and financial responsibility. The fact is that at some point during their lives, our current debt is going to come due and they will suffer from higher taxes, increased costs of goods and in some cases struggle to get by day to day. If we teach the importance of a dollar now and place them on the path to saving for their future, we have done our job as parents so please read further to learn what you can do.
One of the reasons our children fail to understand the value of money is that when they ask for it, we give it to them. This is not the way to guide them to a better tomorrow as they believe that if they need it, someone will be there for them. If you give them an allowance that is earned, they tend to respect it far more and understand that they will have to work hard for it thus it has more value to them. They tend to not spend money recklessly when they worked for it and this is actually the path you want them to be on. We all want to be able to earn enough to provide for our families long after we are gone but those cases are small so they need to learn early in life that money is theirs through hard work and not just given because they ask for it.
Teach your children the importance of saving. Make them understand that they will not be given what they want by filling out a credit application. If they want a home or car, they need to have a down payment. If they wish to purchase a home they will need to show that they are able to save money and not up to their necks in debt with a dollar in the savings account. Make them understand that if their vehicle breaks down, insurance doesn’t cover it and the repairs are made with money they have saved. Inform them of the importance to invest to earn interest or dividends on their money.
One way to make them understand how money works is to play games with them that involve money. Monopoly is a great game if you can make them understand this is how the world works. You can also play a game where you offer them interest on any money they save during the month. When they start to see that they can earn money by not spending it and this is how a bank works, you will have taught them a valuable lesson.
By becoming hands on in teaching your children about money, you are taking the steps necessary to secure their financial future. They need to see firsthand how the world works and the only way to teach them the value of a dollar is by making them earn it and rewarding them as they save it.