Personal Finance Tip of the Day

Handy Personal Finance
ISBN: 9781578593224

What can I do to teach my child about money?

  • Set a good example and establish common goals.
  • Be positive about money around your children and avoid making money an emotional topic.
  • Reward them for doing chores.
  • Show them how to use their money by encouraging saving and delaying purchases.

Perhaps the first step is that you and your spouse share similar attitudes about money, common goals about saving and investing for the future. Children need to see parents speaking with one voice, with little conflict, on financial matters.

You want to be positive because you want your children to associate saving money with something positive, so that they can have these feelings in their adulthood. You want to be balanced in your outlook and explanation so that they may approach financial talks from a neutral rather than an emotional point of view.

Begin rewarding them in some small way, for chores done around the house, and encourage them to save by opening up a bank account in their name, in which to make deposits. This will greatly boost their self-esteem, even if they are only depositing a few dollars. Each time, the child begins think positively about saving, and this may last a lifetime.

It is important to teach a child the value of delaying purchases for things, not impulsively buying just because someone wants it. Show your children that you are saving every week for a vacation, or a car. Let them see that when you are in a store, you may look at things to buy, but since you don't need it right now, you decide not to buy it. Children learn by observation, and if you believe in delaying purchases, and do not pull out the credit card to buy something that you do not have the cash to pay for, your children will begin to do the same.

From The Handy Personal Finance Answer Book by Paul A. Tucci, (c) 2012 Visible Ink Press(R) Answers to more than 1,000 answers to questions on personal finance, its history, and managing one's financial life.
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