March 6th, 2012

3 Ways to Teach Your Kids Good Spending Habits

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kids and money

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.

  1. 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.
  2. 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.
  3. 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

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