Posted by The TaxAdvocate Group, LLC

Fun Ways to Teach Your Kids Good Money Lifestyle

Fun Ways to Teach Your Kids Good Money Lifestyle

We live in a world where money is king and the art of saving for a rainy day is something we should all master, including children. So now is the best time to teach your kids valuable financial lessons.

Here are four healthy financial habits every child should learn.

Encourage ways to get more for less.

As your children grow older, explore ways to teach them "grown-up" money lessons practically and memorably. One way would be to pay them "performance bonuses" for spotting savings opportunities at home and school. For example, when you buy uniforms each year and they find cheaper school shoes elsewhere, invest the difference in their savings. You might consider opening a Tax-Free Savings Account in your child's name or a Trust Account if your investment horizon is slightly shorter. A formal way to save can let your kids know why you are saving and that your efforts are actively making a difference. You can also emulate the discipline of saving money by paying them pocket money on a certain date each month. This shows that money is not readily available and that just like their education, it needs to be planned and saved for.

Keep communication open

Talk to your kids about any doubts they might have about money. By helping them understand what is confusing them, you open their minds to creative ways of working with them. Once kids understand the concept of compound interest, enthusiasm and dedication to increasing initial value can be demonstrated. Also, while the pocket money (weekly or monthly) you donate may be the same, their expenses will change. For example, in a month, your child can request an advance withdrawal to purchase a drawing set for art class and a book the following month. Finally, by providing "account statements," your child will be less intimidated by personal financial planning when they grow up and will have a realistic idea of what it means to plan, review expenses, and be aware of how their money is being spent.

Most importantly, they will learn to plan for what they need and what they want. At this point, let mistakes let them know they shouldn't panic when the environment or costs change. Intuition combined with your lessons is the key to navigating the new financial responsibility.

Buy securely and spend wisely online.

The new generation is growing up with the Internet, but it is never bad to teach them how to shop safely and wisely. Start by teaching your kids the difference between a credit card and a debit card and which one you will be allowing for online shopping responsibilities that you may give them from time to time. Emphasize that transactions should only be made on trusted sites and, for simplicity, provide a list of locations where you will allow them to use the card. You can also suggest that they place an item in their virtual shopping cart for a day or two before purchasing, as this may make them understand if the item is really needed or that some retail merchants may even send them a discount hoping the sale will be concluded. By giving older children the occasional responsibility of making their own stationery purchases (under your supervision), they will learn to compare prices and stick to their budget, and they will also learn to familiarize themselves with the cost of things and how they may change over time. 

Help your child set financial goals.

Financial advisors are trained professionals who are committed to assessing your current situation and helping you develop a realistic strategy to achieve your ideal financial goals. As your kids understand better, find out what their financial goals are. You want them to understand the role of a financial advisor in their personal financial planning journey when the time comes, but more importantly, to be honest with their advisor. You may want to consider including them in your conversations with your advisor. Small lessons equate to big and well-informed decisions, and as a parent, the lesson of continuing to be financially prepared is a gift that will reap many rewards in the future.

Also, never forget to teach them about taxes and the implications attached to defaulting. 



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