Most parents would want their children to be happy, self-assured, secure, and safe and lay a strong foundation of good values that they can build on to thrive later in life. Of the many things that you would want to teach your children, handling money is one of the foremost because it can be very difficult to do well in life without a working knowledge of money. As everyone knows, money is central to our existence; it is involved in virtually every aspect of our lives right from food, shelter, travel, clothes, education, healthcare, childrearing, entertainment, vacations, insurance, heating, and whatever else we need or want to do. Unfortunately, many parents do not get actively involved in making their children financially literate, possibly in the belief that they will be able to master it on their own when required. Much of this stems from the fact that parents are reluctant to discuss money matters with their kids while others say it is due to missed opportunities. Some tips on making your children financially literate and well clued up on earning, saving, investing, and giving money:
Start the Education from the Basics When They Are Young, Says Jonah Engler
According to experts on childrearing, it is best to start educating children about money from a very early age, before they have had the opportunity to form their own opinions on the subject. The ideal age suggested for teaching the concept of money is before they turn seven as it has been established that kids tend to form their habits about handling money around that time. Take the time to explain to your kids the concept of money and how its use. Demonstrating how cash can be used to buy stuff in a store can be a good starting point. If you use credit cards or debit cards, try to explain to the concept without complicating it. Showing them the receipts whenever you purchase something, goes a long way in explaining how money works.
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Teach the Importance of Saving, Recommends Jonah Engler
While your child’s initial interaction with money is likely to involve spending it on purchasing various goods, including stuff for them, it is also important to tell them that saving money is very useful too. According to child psychologists, learning how to save money is not only necessary for handling money well but also teaches them discipline and the concept of delayed gratification. Saving money is all about being prepared for later and teaches the concepts of planning and setting goals. You should explain to them how by saving money, they can build financial security and become independent. Help them to get into the habit of saving money with a piggy bank when they are very young and open a savings account for them when they are older to help them learn the process of elementary banking. The utility of saving is learned faster when you teach them to save up for short-term gratification like a toy they want. According to Jonah Engler, setting short-term goals for children helps them to learn the concept of saving and the value of delayed gratification. As they grow older, they will be able to save up for the longer-term without resistance.
Allow Kids to Earn Money, Advises Jonah Engler
Unless children are allowed to have their own money, they will not be able to make decisions about how to spend and save it. Instead of just dishing out allowances to them, it can be a better idea to require your children to perform certain household chores to earn their pocket money. According to financial experts, the value of money is understood better when one earns it instead of just receiving it. However, parents should not make the mistake of paying their children for all the household chores because as responsible and contributing members of the family, they are expected to pitch in with some activities like clearing up the toys, laying the dinner table, etc. While payments can be made for certain specific chores that may not be a part of their normal duties but overall, it should not exceed their allowances by too much. Opening up bank accounts in the names of the children and depositing their earnings there can also help to teach the kids how to bank.
Assist Children to Learn How to Make Smart Spending Choices, Says Jonah Engler
Apart from learning how to earn money, kids need to also learn the best ways of spending it and how to live within a specific budget. When paying them their allowance or wages for chores performed, they should be told that the money given to them is all that they would have so they would need to plan to restrict their spending within it. According to https://www.cnbc.com, you can plan an interesting experiment that will teach the kids the importance of budgeting. Give them two jars in which they can keep the money they want for spending and saving, and let them make their own decisions regarding how much they should put in each jar.
Explain How Money Can Grow, Counsels Jonah Engler
While teaching kids how to earn and save money is essential, you also need to tell them how they can make their money grow by investing it. If you have teenagers in your family, open up custodial investment accounts in their names and start teaching them about how they can make their money grow by investing it properly. You can make the process more interesting for them by giving them videos and books to read about how investing works and how successful investors build wealth.
Conclusion
When you are trying to inculcate responsible and good money habits in your children, you need to explain to them that it takes effort to earn money, sacrifice to save money, and determination and intelligence to build wealth. You should also make them understand that they should consider them lucky to be able to have the opportunity of earning and saving money and should be eager to help out the less fortunate by learning to give to deserving charities. Your children will thank you for inculcating in them the proper attitude towards money at an early age.
I’m a 20-something stay-at-home mother and wife. I have an amazing husband, a beautiful daughter, two loving dogs, and a lazy cat. I wouldn’t change my life for anything! I love to read, listen to music, cook and blog!
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