| Most kids have no conception of
money. And why should they? Mom or Dad whips out the credit
card or debit card to pay for groceries, writes a check to pay
the car payment, and goes online to pay the mortgage. When cash
is required it means a trip to the ATM machine and then as if
by magic twenty dollar bills come out. There's no connection
between Dad or Mom being at work, getting paid and then using
that pay to support the family.
The first step in teaching children about money is to get
them to understand the concept of cash. Setting an example
is one of the easier ways to do that. The next time a purchase
is made when the children are around, pay cash. It will take
some planning ahead. It defeats the purpose to use the ATM
in front of the child. Going grocery shopping? Use cash.
When taking the children clothes shopping set a goal of spending
a certain amount, say £100 with the objective of purchasing
4 outfits, such as 2 pairs of jeans, 2 pairs of pants, 2 long
sleeved shirts, and 2 short sleeved shirts. Tally what you've
spent so far and when the £100 limit is reached that's
it. Don't be surprised if your child tells you to use your
credit card to make up the difference. They'll be shocked
to see how quickly the £100 goes. They also may be surprised
to see how much of their hundred dollar budget is eaten up
with logoed items or designer clothing.
The second step is demonstrating that using a debit card
or writing a check is spending your own money. The accounts
don't replenish themselves. Set up a savings account for your
child. Use birthday gift money, allowances, or money they
earn doing chores. It's an extra step but take the child with
you and have him or her make the deposit. Check the deposit
slip and show the child that the cash is now in their account.
When the child sees something they want, tell them they can
use their own money to pay for it. Eventually the concept
of the money they have in their account determines how much
they can spend will start to dawn.
Electronic banking, debit and credit cards have made it easier
to keep finances in order. Adults know that their paycheck
determines their budget. Most of them know that it's not possible
to spend more than they earn on a regular basis without digging
themselves deep in debt. Children need to learn these same
rules at an early age to become fiscally responsible adults
themselves.
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