As a parent, it can seem almost impossible to teach your kids the importance of saving for their future and understanding the value of money. Depending on the age of your child, the way you teach these lessons may vary.
According to Robin Taub, an award-winning author of The Wisest Investment: Teaching Your Kids to Be Responsible, she believes that using the 5 pillars of money can help you overcome the challenge of teaching your children the importance of finances.
1: Earn
Regardless of whether your child receives an allowance or has just started working a part time job, earning their own money will help them gain a better understanding of its value and the prices of everyday items. By working a part time job or getting a weekly allowance for doing chores around the house, they will learn quickly that money doesn’t grow on trees. This will encourage them to be more selective when deciding what to spend their hard-earned money on.
2: Save
A great way to help your child understand the value of money and the importance of saving is by pointing out the prices of everyday items. This lesson works best with things your child would normally want to buy for themselves. Take your child along to the grocery store and point out the cost of items you’re purchasing for them. This can help them better understand how much living on their own could cost in the future. Another idea is to make them aware of an item’s price and compare it to the amount of time at work it would take to purchase it. For example, one bag of chips and a drink is the equivalent to one hour of work. Implementing these daily lessons will familiarize your child with the value of money and the importance of saving their money for the things they want and need.
3: Spend
Spending money on things you want is always the best part of a paycheck, but if your child is looking to spend it all right away, this is a good teaching opportunity. This is where a budget comes in handy. It is good to create a budget where they can spend 50% of their income on anything they want and save the rest. As a parent you can set up an informal trust for your child and contribute their savings monthly (making it clear that they will have access to it in the future). Letting your child decide what to spend their money on will give them a sense of independence and a chance to have more responsibility.
4: Share
This pillar is important and will put things into perspective for your child. Living life with more gratitude is a beautiful trait to have and you can teach this by actively trying to give back to the community and/or the environment. Donating to homeless shelters, volunteering, picking up litter in your neighborhood, selling baked goods to raise money for an organization; all these activities make a huge difference. Your child will not only be grateful for their own life, but they will also experience firsthand the feeling of giving back through acts of kindness and what impact it has on those around them.
5: Invest
Teaching your child what investing is and how to do it will probably be the hardest pillar to teach. We wouldn’t recommend teaching a child under the age of 15 just yet, but if your child is working a part time job then they will most likely have some questions and/or want to learn about how they can grow their money for the future.
As always if you have any questions or concerns about your portfolio, please don’t hesitate to contact us.
Have a great weekend,
Tracey and Paige
Blog Source:
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