Many children are not taught how to manage money properly which results in them growing up to be financially irresponsible. Debt is a huge problem today and millions of people are deep in debt, having trouble paying their bills and experiencing relationship issues. Millions of people are declaring bankruptcy annually!
Why do people have so much problem handling their money? This is because society pressures us to spend our money on all sorts of things that we really don’t need. We are told to buy whatever we want because we deserve it. If we don’t have enough cash, we can just charge it and pay later. Unfortunately, the more you charge, the greater the interest and the monthly payments keep growing. It is really fun to take a vacation now or buy a new car, but when you are still making months and years down the road, the excitement will soon disappear.
Children should be taught at an early age how to manage their money. An allowance is a good way to teach them responsibility as long as you are using it as a learning tool and not paying them for doing jobs they should already be doing as part of a family. As children get older, they can be paid for doing extra chores so they are better prepared for future employment and will understand the concept of being paid for doing a good job.
Help your children understand the importance of dividing their money into 3 different areas:
- Save some – Open a bank account for something important in the future like school, a car, a home. Put some in a piggy bank for something they want in the near future like a special item, trip or event.
Spend some – This is for things they want or need right now like snacks, clothes, fun stuff. When you take your child to a store, they can use some of their own money to buy small items so they aren’t expecting you to come up with the money and they will appreciate their stuff more.
Give some – Have your child donate some money to a worthy cause or put in offering at church. This teaches them the value of helping others.
Talk to your kids about credit cards and how damaging they can be if used irresponsibly. Be a good example when using your own credit cards and try to pay with cash or debit.
Helping children manage their money by making confident choices will help them build their esteem and they will have a much better chance at becoming a financially responsible adult,