By the time your kids reach college, you should feel confident that they can make sound financial decisions and stand on their own two feet. Yet studies show that many college students make many serious money mistakes, such as saving less than 5 percent of their incomes, failing to make or stick to a budget, and making late credit card payments. Many also don’t understand basic financial concepts surrounding credit scores and student debt.
3 opportunities to teach your kids about money
If your children won’t learn about personal finance at school, then it’s up to you to fill this key educational gap. Don’t miss these key opportunities to teach your kids about money.Give Them an Allowance
Giving your children an allowance teaches them that they need to spend wisely and budget for items that really matter. Some financial experts suggest linking an allowance to chores and only paying it when your child’s household jobs are completed. Although this helps children realize that they must work hard to get paid, some critics say that such a system can undermine a child’s sense of natural duty to the family. Others prefer giving sums of money to reward good grades or providing a regular allowance without strings attached. Think carefully about what would work best for your family.
Take Your Children Grocery Shopping
It might be easier to shop solo, but you’ll miss an important opportunity to teach your children about money if you do. Explain that groceries are a necessary and regular expense — but one that can vary significantly depending on what you put in your cart.
Let your children observe you comparing prices on similar items and using coupons to get better deals. Encourage them to suggest meals that they’d like to eat for a week, but let them know that if they choose an expensive dish one night as a treat, the other meals must be more affordable.
A supermarket can be full of temptations for children, but it’s important to resist giving in to their pressure. Explain that having willpower and avoiding buying items on impulse is one of the best ways to reduce grocery costs. In doing so, you can save more money for life’s luxuries such as dinners out and family vacations.
Involve Kids in Vacation Planning
Enjoying a vacation is one of the hardest times to keep spending under control. This shouldn’t be kept a secret. Let your kids sit in when you’re making travel plans, and show them how you can use online hotel coupons and flight vouchers to get better deals. Explain that although you want to be comfortable, the less you spend on a hotel room, the more you’ll have for restaurant dinners and attractions. Show your children a selection of different hotels you like, for example, and trust them to make the final decision.