This is BETTER Business, a new personal finance segment hosted by Stephanie Ruhle. Each week, Stephanie breaks down the financial headlines and how they'll affect your wallet — and shares compelling conversations with industry leaders, entrepreneurs and people who've cracked their own personal money codes.
It can be difficult to know where to start when it comes to teaching your kids about money— here are four key things to remember:
Lesson #1: Earning
Allowance is a great tool to start with — but don't just hand them the money, make this a lesson about earning money.
Weekly chores and household responsibilities should be assigned as their "job". At the end of each week, check on their job performance and celebrate — it's pay day! But before they burn through all that cold, hard cash, remind them of the value of that dollar.
Lesson 2: Spending
Allowance is like a wage — get your kids thinking about how many hours they would have to work to earn enough money to pay for something, and then ask if that seems worth it. How many hours of work would your child have to do earn the money to pay for a movie ticket? Or that cool new jacket they’ve had their eye on? Help your children convert hours worked into dollars, so they can start thinking about what purchases are worth their hard-earned cash.
Lesson 3: Saving
Saving can be overwhelming for the younger crowd, after all it’s really a lesson in patience. Show your kids the power of saving just a little bit by charting their goals.
For example, if your child saved $2 every week, they would have $104 at the end of the year. Use a goal to encourage saving: once your child has their money set aside, they can cash in on that big-ticket item they’ve been dreaming about.
All of these lessons are important — but there's one big money habit that many adults still don't practice that you can teach early: how to budget. Which brings us to the final lesson ...
Lesson 4: Budgeting
Use a dry erase board — or for older kids, a spreadsheet or a savings app — and track everyday expenses. Start small and let your kid make decisions about lunch money or smaller grocery items. That kind of practical experience translates into healthier money habits down the road.
For your college-bound kids, make sure they start tracking the money that comes in and out in a way that feels natural and comfortable for them. That way they're ready and responsible when it's time to move out on their own.
These are just the building blocks for a strong foundation in financial literacy. You are never too young — or old — to start learning and practicing the basics. So don't delay — go have that conversation tonight with your family. You'll be glad you did.
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