Your child is a good student in the class and respects all the elders. He is terrific in studies. But is that all? Does he know how to plan a budget and stick to it? Does he know how to use the plastic cards or pay the bills? Probably not! However, he will need these financial skills once he becomes an adult. So, as a parent, it is your responsibility to make your child go through money skill-building experiences from an early age. Read on to know about 5 financial skill-building experiences your kid should go through.
Money skill-building experiences your kid must go through
Here are the 5 financial-skill building experiences your children should go through for developing a good financial sense:
1. Ask your child to accompany you to the grocery store
When you go to the departmental store for purchasing the groceries this week, make sure you take your child with you. Usually, most of the kids love shopping. So, your child wouldn't mind accompanying you to the store. Once you reach the departmental store, give $20 to your child and ask him/her to buy the dinner within this amount. Your child will get a lesson in choosing the nutritious food items as per the budget. She will also get to know about the role of sales-tax.
2. Ask your child to craft the budget of the family
Your child knows that his father works at a good company and earns good amount of money. However, he is clueless about how the money is spent every month. He complains to the neighbors that you don't buy him a video game every month, unlike other fathers. So, ask your kid to plan the family budget for the next month along with you. Notify him about your income and the expenses need to be made in a month. This way, your child will be aware of the financial health of the family. He will learn budgeting skills and know the main difference between needs and wants.
3. Send your child to the creditor for making the bill payment
It often happens that you just don't have time to pay the bills. In such situations, you can give the check to your daughter and ask her to hand it over the creditor. Make sure you write the check in front of your child. You can also ask him to write the check. This way he will learn how to write a check accurately. Tell him to calculate the bill amount before writing the check. If you usually pay all the bills online, then show him the online bill payment procedure.
4. Give daily allowance to your child and show the right way to spend it
You should give a daily allowance to your child even if the amount is as little as $1. Tell your child how to use his daily allowance. For example, you can ask him to spend 40% of the money for making various purchases. He can save 30% of his money for meeting the short-term financial goal. He can save the money for a few months and purchase his favorite video game. The remaining 30% can be used for donating in the charities and meeting long-term financial goals.
5. Show them the ways to earn money
Children will learn the value of money only when they know how difficult it is to earn a penny. An interesting way to do is by setting up a small business for your child. You can set up a lemonade stand in front of the nearest children park. Your son/daughter can sell lemonades to the people visiting the park in the evening. Your child will know how to build business/marketing skills, which is very important at the present time. On the other hand, your son/daughter can also make some quick money.
If you son is not interested in selling lemonades, then he can give pet service in your locality. He will learn to be self dependent in this way.
Last but not the least, you should show your child how to use a credit card without getting into financial problems. You may argue the need to show the right way to use credit card as it has become very tough for the college students to get one after the enactment of the Credit Card Act. However, it does not mean that the college students can't get credit cards at all. This is why it is important for your child to get acquainted with the credit card basics before going to the college.
You can give a prepaid credit card to your child. Your child can use this card according to his/her wish. Make sure you inform your child that the money loaded in the card is his/her monthly allowance. This will make your child to use the card responsibly. They will try to not overspend. Apart from that, your child will get a first hand experience of how to use the card.