Allowances and chores don’t exactly result in a fortune for children, but even at a young age, it’s never too early to start teaching them how to handle money responsibly. According to a study by the University of Cambridge, children typically develop financial habits by the time they are 7 years old. It’s important to teach kids smart and safe financial habits:
- Give children an allowance and let them learn firsthand what it is like having money.
- Discourage impulsive spending by creating a budget and outlining what you plan to buy before going shopping.
- Emphasize the importance of saving by explaining how savings accounts and bonds can help even a weekly allowance grow over time.
- Let children experience saving by opening an account for them—many banks offer children’s accounts that have no fee and no minimum balance requirement.
- Teach children to be skeptical of advertisements and sales tricks by pointing out when certain deals or offers might have a catch.
- Simulate a borrowing experience by lending children money and establishing a date by which they must pay it back in order to avoid accruing interest.
Teaching children anything takes time, effort and patience, but it is important for them to grow up with the knowledge and skills to be responsible with money.