Many Americans today are buried in debt, have at least 2 credit cards that are maxed out, and many are at least one month behind on their mortgage. The recession along with corporate downsizing can certainly take some of the blame for this sad state of affairs; but there is another explanation as well: Most North Americans are not very good at managing their money. Why? Because they didn’t learn from their own parents; and there is no subject in school that teaches the basics of making, saving and investing money. So, the vicious cycle continues, and the next generation will be in the same dire circumstances unless we can teach them how to manage their money effectively. It’s time to break the cycle of debt and bankruptcy.
Luckily, with the help of the internet, even if parents are not the best money managers, they can help teach their kids the value of a dollar. If you want to teach your children how to manage their money and teach them skills that will carry them to adulthood, these tips will help you.
- Give your child an allowance: If your budget allows, give your child a weekly allowance based on their age; detail your expectations in return for the money, i.e: chores, etc.
- Implement a 3-jar system: One jar for spending, one for saving, one for giving. Teach your child to allocate 50% to the save jar, 40% to the spend jar and 10% to the giving jar. This way they get into the habit of healthy money patterns at an early age.
- Teach them about investments and ways to help their money grow: Depending on your child’s age, teach them the pros and cons of different types of investments: real estate, stocks, bonds, mutual funds. Let them choose two or three stocks so they can paper trade.
- Play Monopoly: This classic game teaches basic money principles that are still relevant today. Not only does it teach investing strategies, but it teaches kids about the day to day expenses as well.
- Let them buy their own designer shoes: If they absolutely have to have the latest and greatest fashions, make them pay for it out of their spending jar. They might just find they don’t need those new pair of jeans after all.
- Teach them the importance of paying their bills on time: Explain the concept of interest and how it can affect their credit card balances if they don’t pay them off every month. Teach them the importance of maintaining a good credit rating.
As a parent, you want your child to get off to the best possible start in life. There are many resources you can use either on the internet or in your favourite book store that will help you teach your kids how to manage their money and live debt-free. You can help break the cycle of debt and bankruptcy by teaching valuable money skills to your children; you may learn something in the process as well that will help you manage your money with better efficiency.
Guest Post Written by Johnny Guyzer
Being a newly-wed husband, Johnny Guyzer has more responsibility under his belt and is seeking to improve his financial situation in order to support his future family. This is why he went online to use a price comparison service to compare rates for affordable health insurance and affordable life insurance offered by various insurers to get the best price possible and save money.
- Use a Savings Account as a Teaching Tool for Your Kids (visualeconomics.com)
- Kids and Money: Teaching Elementary-Age Children (bargaineering.com)
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