6 Ways to Teach Good Money Habits to Children
Here are some ideas to use when teaching your child about good money habits
1. Be Good Role Models: Children watch their parents and replicate many of their habits. Therefore, as parents it’s important to showcase good financial behavior by practicing good financial habits on a daily basis. This includes things like shopping on a set budget, timely payments, using coupons and discount offers to pay less for goods, cooking and eating at home, comparing prices before buying etc.
2. Use Piggy Bank Apps: Gone are the days of a traditional piggy bank. Now there are piggy bank apps which help parents teach their kids about money and savings goals. I have used Rooster Money and I like that as a parent I can boost pocket money for the child’s chores, achievements or good behavior. Through this app, kids can take control of their allowance and pocket money. They can also know how much money they have and how it has been saved and spent by checking their statement.
3. Open a Children’s Savings Account: Children’s savings account can be a great learning experience for kids. It will not only teach them how to operate a bank account but also about…
- Income – Depositing pocket money regularly into their savings accounts helps them to understand the concept of earning income in exchange for services, such as chores.
- Budgeting – A savings account can help children to know how to spend some money now, and save some for later.
- Interest – A savings account with a competitive interest rate is a simple way to teach children about difficult financial concepts like how compound interest works.
4. Involve them in Shopping and Budgeting: Grocery shopping is a great, real-life and easy way to teach your children about budgeting, comparison shopping and smart financial decision-making. It will teach them financially savvy habits such as not always choosing the more expensive, branded item when you can choose an economical brand that serves the same purpose.
5. Teach them about Money Management: Children are exposed to credit cards—and credit card debt—at an earlier age than ever before. Discussing how credit cards work before they get plastic money is crucial. It’s important to emphasize the importance of paying balances in full and timely payments. They should know how their spending habits will affect their credit score which will impact them later on.
6. Let them Make Mistakes: If your child saves up enough money for something you think he’ll regret buying later, let him buy it anyway. Letting children make mistakes with money is a great way to teach them to not practice the bad habits when they’re older.