Overspending is a major issue in today's society. Because of this, people are riddled with loads of debt unable to keep their heads above water. Unfortunately children learn by watching what their parents do. As a result they are learning poor habits that will continue this trend. Fortunately though, there are things that parents can do to make sure that they do not instill the bad habit of overspending in their children. Teaching children to respect money is the first step in this process.
Make Them Aware of the Cost of Things
One of the best ways to teach a child to value money is to make them familiar with the costs of items. While shopping show your kids the various items that they are interested in and discuss with them the costs of each of those items. Also help them to understand the process of saving money and that parents do not have an unlimited supply of money.
Kids do tend to think that money is unlimited and that the ATM will give you as much as you want. The more you help to explain to them budgets and that there is a limited supply of money to spend, over time they will gain a better understanding. This will help them develop a greater respect for the idea of saving money.
Teach Costs of Other Items
When discusses the price of the toys and things that your kids are interested in it would also be a good idea to give them the costs of everyday items. These include groceries, health and beauty items, clothes, etc. This will help them to better compare costs and get an idea of how much of a sacrifice that the new video game system that they are interested in will be.
They may be more hesitant to ask for expensive items when they see that they cost the same amount as groceries for 2 weeks. Even if they do ask they will have a better understanding of why you may say no.
Teach Them About Saving
Teach your child the habit of saving money. Have them put money away in their piggy bank or savings account if they have one established. Whenever they want to purchase something let them spend their own money. When they begin to see their money dwindle they will be more hesitant to spend.
For some reason it is easy to spend Mommy's or Daddy's money, but when it comes to spending their money somehow things seem quite different. As you begin to instill in them the habit of saving they will have a harder time spending money frivolously when they get older.
Encourage Your Child to Save Money
You must not only teach your child to save money. You should also provide a motivation for them to do so. You can start this by introducing a nicely designed piggy bank. You can go for the musical piggy banks to help a child become interested in saving. You may also want to give them bonus amounts for saving. For instance you could give them $5 for every $20 saved. This will also help them to understand the principle of earning interest on their money.
As your child grows, you can introduce a college investment plan for them to support their education. For grown up children, after school jobs can also be a good way of earning money and teaching them to value it.