You love your kids more than anything else in the whole world, isn't it? It won't be pleasant for you to find your kids going through a financial crisis. Thus, start teaching your kids about money management from the early age. Your advice to the kids and teens regarding money management will help them become responsible individuals and they'll avoid major financial mistakes later in their lives.
Here are 4 steps which you may take in order to help your kids develop better money management habits:
1. Inform kids about your source of income: It's important for you to let your kids know where the family income comes from. You should inform the kids about the earning members of the family, the amount of your monthly/weekly income, etc. Also, inform the kids about your monthly family expenses. You can even explore the various ways of earning money in front of them and inform them about taxes and tax deductions.
2. Plan your budget in front of the kids: When you are planning your budget, involve your kids in it. While you allocate money for different items on the budget, teach your kids how they should allot their pocket money for various expenses that they incur throughout the month. Make sure that they understand the fact that when your income is limited your expense should also be limited.
3. Teach kids to save money: Your kids should know how important it is to save money. Explain them what kind of emergency situations may arise and how one can cope up with it if he or she has saved money. Once they understand this basic concept, it will encourage them to save money for the future which will in turn help them when they are facing a future financial catastrophe.
4. Give rewards if they can save money: If your kids are able to save money, reward them for their achievement. You can give them an additional amount if they are able to save a stipulated amount from their pocket money. This will encourage them to save more.
You should take the initiative in order to help your kids develop successful money management habits. In the long run, they will become responsible individuals and will thank you for your financial teachings.