Thursday, April 6, 2017

Financial Lessons To Teach Your Kids (Part 1)

Being a parent is a big responsibility. As your children's guardian, protector, and number one role model, your actions are hugely influential in their lives. You will be impactful in all arenas of your children's lives, but for the purposes of this blog, our community bank at the Lake of the Ozarks is here to look specifically at the financial aspects of your children's lives. Here is a quick overview of some simple (but crucial) financial basics to teach your children.

"Money Has To Be Earned."

It's important that your children learn the value of money. The best way to do this is to offer financial rewards in exchange for the completion of household chores. (We recommend that you refrain from offering them an allowance that they receive weekly, regardless of whether or not they helped out around the house.) This will help them to grasp that their work is valuable, and so is their money. It will help instill a work ethic and help them to appreciate the money that they earn. When they receive money as gifts from family members for their birthday or holidays, they will be more likely to appreciate the value of the gift.

"You May Have To Save Up Before You Can Buy."

Delayed gratification is a tough lesson for many of us, but it's a crucial component of maintaining a proper spending/buying balance. Children must learn that they have to save enough money to make certain purchases. Help them count the money in their piggy bank, and then ask them if it's enough to pay for the $10 toy they have their eye on. If it is, great - it's time for a trip to the toy store. If it's not, tell them how they can earn the rest of the money they need to make their purchase (such as by helping with household chores).

"You Have To Use Your Money For Different Purposes."

Part of proper money management is learning how to allocate your funds for different uses. You can instill this concept in children beginning at a very young age. Instead of using a single piggy bank, consider giving your child three piggy banks and labeling them with specific categories: "saving," "spending," and "sharing." When they receive their allowance, encourage them to divide it evenly between these three categories. The "saving" bank can be used to save up for more expensive purchases, whereas the "spending" bank can be used for inexpensive treats. The "sharing" bank can be used to donate to a charity or buy birthday presents for their siblings, which will help instill a sense of generosity and teach the benefits of giving.

"Once You Spend Money, You Don't Have It Anymore."
In your children's eyes, it may seem like you have an infinite supply of money. It's important to teach them that every dollar you spend is a dollar you don't have anymore. Teach your children this lesson by encouraging them to make their own purchases. Have them take money out of their piggy bank, and let them be the ones to hand their money to the cashier in exchange for their purchase. Letting them be closely involved in this manner will likely be much more effective than trying to explain the concept verbally.

Check Back Next Week For More Tips!

These four lessons are important ways to begin to teach your children the value of money, but they aren't the only steps you can take. Next week, we'll offer a few more lessons to help you round out your children's financial foundation.

Remember: your children are guaranteed to learn about money from someone. By proactively teaching them smart money habits, you can help them avoid learning bad habits. 

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First Bank of the Lake - Striving For Excellence
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Osage Beach, MO 65065

(573) 348-2265

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