Tax season is here and while it’s easy to find yourself in “survival mode” around this time of year, just trying to get the taxes done with, it can be a great time to teach your kids about the basics of taxes as well as other good money habits. It’s never too early to start teaching your kids how to handle money. The first attitudes your kids have about money could be the one that influences their spending habits as adults. Make sure your kids learn to spend money wisely and avoid unnecessary financial crisis later on in life.
Start with Pocket Change
First, help them understand the importance of money. Start small, working with loose change. Young kids won’t understand the true meaning of credit cards and bank accounts, so use cash to teach them how to handle money. Try keeping a clear bowl of loose change and show them visually how money can add up over time.
Take Your Kids Shopping
A good technique is to take your kids shopping with you. This will probably be a hassle and it may be embarrassing if your kids are screamers, but it will pay off in the end. Teach them that just because you have money to buy groceries, it doesn’t mean you can spend extra for unnecessary candy bars. When they ask for this stick of gum or that doughnut, tell them no. Save those kinds of treats for special occasions. (You can teach two lessons at once that way. Buying them spontaneous treats in the grocery store can be rewards for good behavior, service, or doing chores.)
Also, when shopping, let them see you looking for sales, using coupons and shopping smart. Then when you get home, throw some money in the change bowl at home to show them how much money you just saved. Once the jar starts getting full, you can use that money to take them out to an arcade, carnival, or theme park. They will learn that saving money on a daily basis leads to great rewards.
Make Them Work for Money
Second, teach them the importance of earning money. Avoid just giving your kids an allowance. Instead, have them do chores around the house to earn it. If they want extra money, they can take on larger projects. This will teach them the importance of work and the value of money.
Set Up a Savings Account
Third, as they get older, have them set up a savings account. Allow them to spend some of their allowance right away, but have them put most of it to their savings account. Let them take trips to the bank and see their savings account grow.
As your kids get even older, let them manage their own money. It’s ok to let them make some mistakes on their own so they will learn for themselves how to handle money.
Always be there to make suggestions or guide them, but let them know that you trust them to use their money wisely. It’s better to let them learn their lesson in high school, blowing their small savings on something stupid and realizing that they can’t afford to go to junior prom, than as an independent college student who has to drop out because they wasted all their money on a Mercedes.
Teach your kids to manage money now and watch them grow into responsible, money-smart adults!