The sooner your child learns about money and its uses, the better prepared he or she will be when it’s their turn to head out into the world. And it’s never too early to begin teaching them these invaluable lessons.
In The Home
Of course there’s no point in bringing your toddler to a bank or department store to teach them how modern day finances work. So begin at home with some baby steps. Assign your child some tasks around the house. Whether it be picking up toys, helping with the laundry or emptying the wastebaskets, etc. Institute a system of reward for their work: allow them to pick out a small toy or other bauble at the store. As they get this reward, make it clear to them that it is a result of the work they did, and that they have earned it.
When your child is a bit older, turn this reward into a cash reward in the form of an allowance. Again explain to your child that they have earned money from doing various chores and that the money is theirs to spend however they want. It will be difficult, at this stage, to get them interested in saving this money, but if you can pull it off, your child will benefit.
Keep this work/reward system going into your child’s early teen years. Before they begin working outside of the home at summer jobs, or full-time out of school altogether, do your best to instill the concept of saving portions of their earnings. Not for their future – as early teens usually can’t see past the moment, but, rather, interest them in saving for some particular item they desire that cannot be purchased with a single week’s wages. Participate and encourage them to grow their savings while keeping their sights on their goal.
These steps should help prepare your child for the next stage of their understanding of money and finances.
Outside The Home
Once your child begins working outside of the home, this is where the groundwork you have laid will come into play. When he or she receives their first pay check, go with them to the bank and guide them as they set up a bank account.
Hopefully you have explained how savings and interest work beforehand so they will have a grasp of what they are doing at the bank. Always encourage them to grow their savings. Have them invest in a stock of their own and explain the financial pages to them, show them how to track its rise and fall. And now is the time to bring them with you when you go shopping and let them see how commerce works.
Your participation in shaping their financial futures does not have to rest solely with giving advice. You can take a more active hand by giving your child their first job. If you own a business then bring them into it. No special treatment here, let them find their own way as they experience firsthand what it’s like to earn a wage in the real world.
I’m sure if you sit down and think about this, you can come up with suggestions of your own which will help your child. No one knows them better than you after all. These guidelines are a great place to start and will point you in the right direction.