With skyrocketing national levels of credit card debt, record-low levels of savings and an economic crisis caused largely by a lack of financial literacy, the time has come to end the cycle. Unfortunately, a recent online poll conducted by Charles Schwab & Co. found that twice as many parents teach their kids how to do laundry as balance a checkbook.
The poll also revealed that many parents are uncomfortable talking to their children about money - maybe because they themselves don't understand key financial concepts. That's why we at Total Bankruptcy are here to help you help your kids. Many financial experts recommend giving kids an allowance as an excellent way to teach the value of money. But there's more to it than doling out a few bucks every week. Read on for details.
If you're recovering from bankruptcy or trying to cut back on spending, you're hopefully already following a budget for your household. Before you can determine how much money to give your kids each week (or month), you need to look at what you're already spending on them.
The purpose of giving your children an allowance is to teach them lessons of financial literacy, not to reward them for good behavior, etc. Experts discourage linking allowance to chores or "good behavior," since it sets up a false connection between such things (i.e. your kids will get the message that chores/kindness to siblings/studying for school are choices rather than expected behavior).
To make sure your kids learn the right lessons, be sure to set up rules about allowance.
Helping your kids understand the importance and power of savings is of utmost importance for their financial education. Don't be afraid to start them young.
So how do you know if your kids have become financially literate? Using such a broad term can make it difficult to assess progress, so it's helpful to set out specific goals. Common lessons you may want your children to learn may include the following.
Depending on their ages, you may have different aims for your kids, so be sure you know what you want them to learn before you start. And remember: kids learn by example. If you want your children to have a healthy relationship with money and credit, it's important for you to make sure you're handling your own wealth in a reasonable manner.
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