March 6th, 2012
3 Ways to Teach Your Kids Good Spending Habits
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What would happen if you spent over half of your income on your “wants”?
You might be living a lot like a 9-year-old.
Money Management International conducted a Kids and Money survey in 2010 to discover how kids use their cash at different ages. Of surveyed children under the age of 10, the study found that:
- They save almost one third of their cash.
- Only 1 percent of their income goes to charity.
- 54 percent of their cash is spent on “wants.”
- 11 percent of their cash is spent on “needs.”
While kids have us beat in the savings category—more than one-third of us aren’t contributing to any long-term savings programs—they could stand to learn a lesson or two when it comes to spending their money.
How you can teach your kids responsible spending habits?
Parents are responsible for making sure their kids enter adulthood with a good understanding of the value of a dollar. Here are a few ways you can keep your kids on the right track.
- Put a limit on their “self-spending.” Teach your kids the importance of helping others with their money by encouraging some habits. For instance, for each toy your child buys for himself, teach him to contribute a percentage of the purchase amount to a local charity. You can also help him better understand the concept of giving to charity by having him help you pick out a classroom project to support on DonorsChoose.
- Help them understand the difference between “wants” and “needs.” Take your child grocery shopping with you every so often and explain to him or her that milk is a need, but a candy bar is a want. Show him how to discern between the two by letting him help you shop.
- Set a good example, even when you don’t think your kids are watching. From your child’s perspective, your credit card from Chase Visa may seem like a magical plastic square that allows you get the things you want for free. In addition to taking the time to explain the concept of credit in a kid-friendly way, also remember to make wise credit choices yourself. If you’re comfortable, let your child see you making a credit card bill payment. For more ideas, read “How to Teach Your Kid about Credit” at LearnVest.
What’s one way you teach your kids responsible spending habits?
Have a Karmic Day!
Bethy Hardeman, Social Media Maven