Good financial habits can take a long time to develop, so it's important to begin teaching and practicing with your kids at an early age. Read on for five basic money management skills to teach your kids.
1. Provide an allowance. Children learn by doing. Base the amount of the allowance on your child's age, maturity, and the cost of living in your area. As the child grows, increase the allowance and let him or her take over buying some necessities.
2. Let them do some of the research. Some parents have their children find out how much money they need for something they want — and even submit detailed "budget" requests in writing. These can then become the basis for negotiating allowances. This practice works especially well when kids leave for college and the amounts under discussion go from tens and hundreds of dollars.
3. Don't penalize a child for working. If you reduce allowances when your child gets a job, it punishes them for taking the initiative.
4. Encourage (or require) regular saving. Open a Savings account in your children's names. Then encourage them to put a percentage of everything they earn or receive as a gift into savings. Use this to teach them how to put money aside for big expenses.
5. Teach by example. Experience is still the best teacher. Believe it or not, your children do pay attention to what you do, including how you manage your money. So, be sure to practice what you preach.
The Financial Five is a monthly consumer column from Ohio's credit unions that provides important financial tips to consumers.