A recent survey found that the average high school student scored a lousy 52 percent when given a standard finance test. So parents, here are tips that’ll teach your kids the value of a dollar. Courtesy of Money Magazine.
- Start early. Research shows that children pick up most of their spending habits before age 12. So use everyday opportunities to slip in money lessons. For example, if you use your credit card, explain that the bill gets mailed to you, and if you don’t pay the whole thing, you’ll be charged more money in interest later. If your kids learn these lessons at an early age, they’ll make better choices when they have their own credit cards and bank accounts.
- Make saving a habit. A recent study by the University of Illinois found that college students who had good money habits said their parents taught them how to save at an early age. So encourage your child to put part of their allowance or job money into a savings account. You can also encourage them by matching what they put in the bank. Or tell them for every 10 dollars they save, you’ll contribute one dollar. Once they see the benefits of saving, they’ll be more likely to do it when they’re older.
- Let them ‘earn’ their allowance. Researchers found that only 35 percent of kids who got a regular allowance described themselves as good savers. Why? Because knowing they’ll get money every week takes away a child’s incentive to save. What’s the fix? Pay your kids for the actual work they do. If they don’t do any chores one week, don’t give them an allowance. If they wash the car, mow the lawn, and do the dishes, then go ahead and pay them. You can also try paying your kids an allowance every other week or once a month. That’ll teach them to budget for the weeks they don’t get paid.
If you’d like to go further, check out the book Raising Money Smart Kids by Janet Bodnar.