We all want our children to be successful in life, and part of that success is dependent on how they manage their finances. Preparing your child at an early age to understand proper money management can make all the difference in their lives. Good or bad money habits develop over time and at an early age.
Start by opening a bank account in your child’s name.
By encouraging your child to save their Birthday or Christmas money, he or she can see how their balance can increase over time. When your child asks for that new cool game, you can encourage them to pay for it themselves. That way, he or she can see how their balance will decrease with such a purchase.
Oversee your child’s purchases to help them determine what is reasonable and what is not.
If your child is looking to purchase something that is beyond their financial means, the parent can advise on consequences such as overdraft charges and debt. If the child continues to opt for unreasonable purchases, clearly, he or she is not ready for a credit card. Alternatively, if the child stays within their financial means, maybe it’s time for one credit card. Related OCCA Blog – Should Students have a Credit Card?
Your kids are watching you!
Usually kids emulate what they see and hear from their parents. They tend to see money how their parents do. Therefore, if you show your children how diligent you are when balancing your cheque book, your child will be more likely to manage money the same way. Don’t see your child as being too young to understand money. Your child is capable of learning the value of a dollar at an early age; whether it is from earning a dollar for cleaning their room or understanding why they can’t have a treat every time you go to a store.
Naturally you’ll want to give your child what he or she wants (it’s simply in the blood of being a parent). However, to ensure your child doesn’t think “money grows on trees”, you need to buckle down and make wise decisions. Will buying that toy for your begging child short change you for this week’s grocery bill? If so, explain to them the consequence of such a purchase. Tell them, in simple terms, what debt is and what you need to do to pay it off. By understanding the process, our children should have a better appreciation of money earned, how it is saved, and how it is spent.
Remember how it felt when you got your first pay from your first job? Share the lessons you learned in life with your child. It’s amazing what children learn by example. Make each lesson you teach count.
For more information about how to manage your budget, call the experts at OCCA Consumer Debt Relief at 1-866-USE-OCCA or visit www.occa.ca. We can help!
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