Graduation time is just around the corner. Whether it’s Kindergarten, 8th Grade, High School or College, basic financial lessons are vital to launch your kids to success. When do you start? As soon as kids know what money is. You don’t even need to wait until they know how to count it for fiscal responsibility to begin. I was saving my tooth fairy money to buy coloring books (that was when I got $1/tooth back in the day).
A good place to begin is with an allowance. By allowance I don’t mean cash for performance of certain chores or getting good grades. Paying your kids to do things they should be doing anyway doesn’t actually build a good foundation for working for a living. Nobody pays us to keep our house clean, do the laundry or cook meals. But it’s an excellent way to teach them to save, spend or give to charity. When your child wants the latest gadget, talk with them about how much it costs and have them save toward the purchase, even if you agree to split the cost. When you do that, it’s vital that you stick to your original agreement.
As your children become teenagers, you can begin introducing them to Jobs for Hire. These are things you would pay someone outside your home to do. Things like cleaning the gutters, mowing the lawn or power washing the driveway work well for these “jobs”. This gives your kids an opportunity to learn the value of working for money. Make sure you set expectations for acceptable completion of the work just like you would if you hired someone else to do it. This prepares them for their first job. That extra money can be put towards bigger purchases like a new tablet or their first set of wheels! Which is a great opportunity to teach them about saving (investing) for the future.
As your kids mature, you can take them shopping for school supplies, clothes/shoes and even groceries. Let them do price comparisons and let them keep what they don’t spend. They learn quickly that the $30 sneakers look just as cool as the $60 pair when they get to keep the difference. This is a great age to introduce them to the concept of spending plans and establishing credit. Show them your monthly household expenses and payment schedules. When discussing credit, teach them that a credit card must be paid off every month. If you don’t have it in the bank, don’t spend it, right?
At Emerge Wealth Strategies, we LOVE working with young people to get them out of the gate strong. Reach out to us to schedule a meeting with your kids to talk about financial success!