By Nick Kania • July 24, 2015
It’s no secret that sometimes we have trouble with money. According to creditcards.com, American consumers owed $3.34 trillion in debt as of February 2015 (not including mortgages). That number is, in a word, astounding.
Here at Promocodes.com, we wholeheartedly believe in saving you money and helping you spend it right. Many good financial habits can be learned at a young age, and parents can be the greatest influences in teaching their children these important lessons. To help with this guidance, we’ve created a list of ideas to keep in mind when showing your kids how to manage their money. With the right conversations and some well-spent time, your child can be on his/her way to becoming a smart spender and saver!
Sometimes, you can’t help but take out loans for things (e.g. college, a house). However, it is important to teach kids that they have a certain amount of money, and spending more than that is a bad idea. It’s easy to run up a credit card quickly; it’s much harder to face the damage when the bill arrives at the end of the month.
Tip: When you take your child shopping, give him/her a small amount of money to spend and see if he/she can meet a goal without asking for more.
By allowing your children to consider what is needed and how much money they have, you are preparing them to learn about budgeting. You are also instilling them with the wisdom that they should try as hard as possible not to over-spend.
Children happen upon money; usually, relatives (of the grandparent variety) gift it to them. The issue here is that a child who is given $20.00 doesn’t quite understand the value of each dollar since he/she didn’t have to work for it.
Tip: By assigning your child tasks and chores to do, you can provide a small weekly allowance.
In doing this, you are connecting regular income with performing work. Your child will consider purchases more carefully if mowed lawns and washed dishes produced the money. Moreover, he/she will learn the priceless lesson that money must be earned, preparing the way for a competitive job market.
When you’re a kid, it can be kind of hard to understand what it means when somebody tells you a car costs $30,000. The numbers seem so abstract and arbitrary. Therefore, parents can reinforce good spending habits by teaching kids about the costs of living.
Tip: Show your child several objects of very different price ranges so he/she can begin to grasp what things cost.
Show your kid a water bottle, a lamp, a TV, a heating bill, and a car (or any other combination of different things), so he/she can begin to understand that a dollar will be met with a drink, whereas hundreds of dollars will get an appliance. Kids will understand that the TV cost five hundred water bottles, and the car cost three hundred TVs. If you’re lucky, the kids might also be more careful when playing in the house.
Let’s say your son has started saving some allowance money. There’s a new video game coming out at the end of the month, and he’s getting the $60.00 together for it (I know, I’m not sure how they got so expensive). Now he’s at the store with you, and he’s got his eye on some candy. How can you teach him to prioritize purchases?
Tip: Talk to your child about his/her wants and establish goals for saving.
If you actively talk to kids about what they want, you can help them come up with a savings plan to get it. If your child gets $10.00 a week in allowance, teach them that setting aside $5.00 for his/her goal and $5.00 for spending (or any other ratio) will help in the long run. This way, you can instill what’s known as “delayed gratification” – the idea that you can put off a small purchase now and save for the big purchase that will make you happier at a later time.
You’re at your preferred grocery, and you decide to buy the store-brand cooking spray instead of a name brand. In your opinion, it works just as well and it allows you to save some money. You do this with several other things, and you find that the money you aren’t spending on branding definitely adds up.
Tip: Whenever you use coupons, choose a cheaper brand, or look up product reviews, explain to your child what you’re doing and why you’re doing it.
If we coach our kids from a young age, they’ll have no problem going online to look up coupons and sales for any purchase. Moreover, we can show them that for expensive buys (phones, cars, etc.) it is smart to read reviews and watch videos. Evaluating what you’re getting is an important part of saving money and is key to avoiding buyer’s remorse.
Raising kids can be tough, and there is quite a lot you must consider when teaching your child about the world. It can be difficult to set aside time for such a complicated topic as money. However, if you can manage to cultivate a strong understanding of money and savings, you will equip your child with important skills that will serve him/her for life.
Nick Kania Nick is our summer editorial intern who attends St. John’s University and lives in Brooklyn, New York. You’ll likely find him drinking his third cup of coffee somewhere, thinking about faraway places and how to get there.