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Step 1
A good majority of preparation is education. Start familiarizing your child with the concept of money management at an early age.
This can be accomplished by establishing a chore chart and allowing the child to earn an allowance. The chart should be well defined and understood by both parent and child. Be sure that you can realistically and consistently afford the allowance because the concept will be anti-productive if you cannot pay or if you take back earnings. -
Step 2
Teach the child to count money. Let the child pay for purchases and help them to count the money and the change due.
This will teach the child and build their self-confidence. -
Step 3
Open a saving account for your child. Help them to review and let them manage their account statements. Teach them about the pros and cons of online banking and how to protect their identity and passwords.
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Step 4
Plan and manage a small business with your child. This can be something as simple as recycling bottles at your local recycling center. Deposit half of the earnings into your child's savings account and let your child manage the other half.
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Step 5
Teach your child to spend wisely and to have goals for their spending. Instill the thought that impulse buys tend to waste money quickly.
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Step 6
Introduce your child to good credit management habits. Educate them on FICO scores and the way they help and hinder people in everyday life.
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Step 7
Involve your child in various family spending discussions. This can be something revolving around planning family vacations to grocery spending.
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Step 8
Listen to your child's questions and welcome their input. A child's best learning tool is observance so be the wise financial planner that you want your child to become.
Comments
Susanh said
on 5/29/2009 Excellent advice. It's vital that our children understand money, debt, and savings. 5*****