Last week we wrote about the Girl Scouts new financial literacy initiative but we think every child, not just Girl Scouts should learn good money habits early on. Ask your five-year old where money comes from, and the answer you’ll probably get is “From a machine!” Even though children don’t always understand where money really comes from, they realize at a young age that they can use it to buy the things they want. So as soon as your child becomes interested in money, start teaching him or her how to handle it wisely. The simple lessons you teach today will give your child a solid foundation for making a lifetime of financial decisions.
- Teach your child financial independence with an allowance. Stick to a regular schedule. Give your child the same amount of money on the same day each week.
- Take your child to open a bank account. Many banks have programs that provide activities and incentives designed to help children learn financial basics. Let your child take a few dollars out of their account occasionally.
- Let your child set his/her own financial goals. Write down each goal, and the amount that must be saved each day, week, or month to reach it. This will help your child learn the difference between short-term and long-term goals.
- Take your child shopping. Show your child how to compare items based on price and quality. For instance, when you go grocery shopping, teach him or her to find the prices on the items or on the shelves, and explain why you’re choosing to buy one brand rather than another.