Teach kids about money while you’re stuck at home
We are all locked down at home, and probably running out of things to do to entertain our children.
This might be a golden opportunity to teach our kids some valuable lessons about money. Learning how to handle money properly at an early age might sound a little boring to them, but it is one of the most important things to teach our children before they step out on their own.
Here are some activities you can do with your children during this pandemic to put them on the road to financial literacy:
Allow Your Children to Earn and Handle Their Own Money
Give them some jobs around your house that are age-appropriate. Once they are completed, pay your child an allowance right away. Set up a specific schedule so your children see the chores must be done by a deadline. This discipline will end up helping them in many areas of life. Allow them to handle the money so they get an early look at budgeting and how to purchase things with their own money. They will quickly realize not all items are affordable and have a better understanding of why you turn down some of their requests.
Review Your Bills with Your Child
Let them see the monthly gas and electrical bills, and maybe you’ll have better luck when you ask them to turn out the lights. Take the time to walk them through your credit card bill. Show them how every transaction is itemized; tell them how the bill is due on a certain date or else there are penalties; explain the minimum payment and how interest is assessed on any unpaid balance. Be honest and tell them of your past mistakes with your credit card and how that cost you money. This could be a great learning opportunity on the pitfalls of not using a credit card properly.
Establish a Savings Plan
Just about everyone can save more. Take this time to teach them about saving a portion of their allowance and any gift money. Encourage them to put aside a certain percentage of the money they earn, and place that in a savings account. Discuss how this is a way to save up for that special item them may be desiring. It is also a good idea to teach them to donate a small amount of their money to help others. This pandemic would seem to be a perfect time to teach this lesson since so many people are in need.
Discourage Impulse Buying
Children always seem to be asking you to buy something for them in every store you enter. If they see it, they usually want it! We obviously can’t afford to buy them everything they want. So why not establish an amount before you enter a store: “You may buy one item under $10.” If your child finds a $7 item, you could add the other $3 to a savings account. If your child spots something that is greater than $10, encourage them to save the additional funds that are needed to buy it. Be sure to include tax on the item to help children learn the total cost of a product.
Practice Smart Spending in Your Own Life
Children learn by example, not just by words. Take a look at your personal spending habits and what you can do to be more prudent with your money. Show them money is here to enjoy, but one needs to be practical. Stay within your means, and demonstrate you don’t make significant purchases until you have money for them. Explain that all bills are to be paid off in full each month and show your children how wonderful it is to live without debt. That is an important financial lesson they hopefully carry with them for life.
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If you are interested in speaking to someone about savings options for your child, First Midwest Bank is here to help. Just visit us at FirstMidwest.com.