Today’s financial downturn is due in no small part to people’s inability to accurately gauge financial decisions ahead of time. When it comes to your children, you obviously want them to have a better understanding of finances. But how can you instil this know-how without enrolling them in an accounting programme?
You can, in fact, start helping your child to develop a financial sense at a very young age. By allowing them to do chores for pennies, for example, you can let them have a taste of earning their own keep, and if you pay out on a monthly or bi-weekly basis they can start looking at their money as a commodity that needs to be considered carefully in order to work as well as possible for them. This can instil a sense of working for their treats, which is a very valuable idea to come to terms with in the sense that it will be something they have to do for the rest of their lives.
Buying them a notebook and having them keep track of their expenditures is a good plan. Have them paste in receipts and allow them to make projections for the month to come, so that they can spread their spends over the course of time and enjoy it in small increments. This will allow them to develop budgeting skills.
You can allow your child to take out a loan from you, and help them calculate repayments and interest rates so that they can make their own decisions in terms of either buying what they want right now, or saving up and saving money.
Purchasing some low-grade accounting software can help them to keep track of their earnings and their expenditures and make more informed decisions, but notebooks and a spreadsheet can do the same trick. Make sure they have a calculator handy and help them figure out how to make the right calculations to know what they’re getting into.
Helping them work out what they would need living on their own is a good plan, too. Obviously you won’t charge them a real rent or make them pay their own bills yet, but it may help them to know what would be involved and what they could expect to earn on a monthly basis as this helps them to prepare for life outside of your home.
If you occasionally touch upon these issues and help your child to budget their spending money, they will be able to develop the financial and budgeting acumen required to make good monetary decisions for life.