Every parent wants what’s best for their kids. While some focus on showering the children with their dream gifts, others think about ways to ensure that the little ones will be safe and secure. And it’s up to you as a parent to lay a foundation they will be able to rely on when trying to do well in the future.
Children start to learn about money from early childhood. Teaching them how to manage their money and setting them up to become financially literate once they grow up and start making their own income is one of the best things you can do.
However, you can’t just expect them to figure it all out on their own. Besides the importance of starting at an early age, you also need to stay involved in the process, teach them the habit of saving, give them opportunities to earn and spend money, and help them make intelligent choices regarding what they save for.
Teaching children about money helps them manage their own finances as they get older. Read the article below to learn how to do it the right way so you can do what’s best for your children and model good financial behavior.
Start At A Young Age
The sooner you start teaching your children wise money management, the better. However, this doesn’t mean that you should force a toddler to sit with you through lessons about budgeting and the ways to afford live in care – it might be a bit premature.
In general, it’s recommended to start around the age of seven, when the child is fully capable of understanding the value of money and has a grip on how things such as shopping or being gifted money from family members work.
You can start by explaining to your child what money is and how it is used. Then, it’s advised to simply take your kids to a store and show them the whole process of buying certain goods, from estimating how much the entire cart of groceries will cost to paying at the checkout, saving the change, and making sure that you didn’t overspend.
You should also give the kids a certain amount of money, for example, $5, and let them make their own purchases under your supervision.
Besides explaining and showing how cash works, it’s also good to teach your kids what credit and debit cards are. Doing these things early on will lay a good base layer to form good financial habits, and once your kids get older, you won’t have to tell them to see which is better: Lyft vs Uber, because they will know that it’s always good to compare the prices and check what the best deal is.
Teach Them About The Benefits Of Saving
Spending money is likely to be one of the first “serious” interactions your kids will experience when handling cash. Therefore, it’s crucial that besides teaching them about purchasing different items, you also make sure they know that spending isn’t the sole purpose of money and saving is just as important.
Learning how to save is a vital money habit that also needs to be formed from a young age. Besides teaching your children discipline and showing them what delayed gratification feels like, it’s also an excellent way to show them how to set smart financial goals and plan for them. For example, if they get life insurance with pre-existing medical conditions, it probably won’t result in a huge dopamine spike but could be a true life-saver later in life.
It will also enable your kids to build their own financial independence later in life and have better chances of achieving financial security once they get their first job.
You can get your kids a piggy bank or a simple jar dedicated to their savings early on. Tell them that they’re supposed to put their coins and cash, and once they save enough, they will be able to buy a toy they really want or spend a chunk of the savings on sweets.
Ask them to set goals and encourage them to dedicate a page in a regular notebook to write down how much money they already have and how much they still need to reach their first small financial goals.
Give Them Opportunities To Earn money
Once your children grow into teenagers, they can get a part-time job and enjoy more financial freedom. However, the younger kids also need their own money to learn to save and budget. To help them, you can decide to give them a weekly or monthly allowance, depending on your family budget and the amount of money you deem appropriate.
Instead of paying your children for the chores they complete by setting a certain price for every task, for instance, two dollars for helping to sweep the floor, give them a set of simple, age-appropriate chores they need to finish in a week. Then, once they do everything, reward the good behavior by giving them their allowance. If they neglect their chores, there should be no allowance – this will teach the children that money is earned and that they won’t be paid for doing anything later in life.
Help Them Spend Their Money Wisely
Choosing to establish the allowance system will help you teach your children both about earning money and spending it, so they can experience how it is to live within a budget.
When your children get an allowance, you need to remind them that it’s all the money they’re going to get, and if they spend it all in one day or splurge on something they don’t actually need, there will be no more money coming until next week or month.
Additionally, try to teach your children that buying things they want isn’t the sole purpose of saving money. It’s much better to ensure they know that they will need to know the difference between the things they “want” and the items they “need” to buy once they grow up.
Teaching your children about the value of money is a good way to help them understand why you should avoid spending on unnecessary things and save for a rainy day.
To sum up, if you want your kids to develop good spending habits and ensure that they stick to them as they grow older, you should start teaching them good financial habits from a young age. Show them the value of money by letting them make their own purchases, encourage them to save, and set goals regarding things they want to buy.
You can also give them opportunities to make their own money and earn their allowance and remind them about the importance of budgeting and making wise decisions when purchasing the things they want.
Educating your children about personal finances might be a challenge at first. Still, if you put enough time and effort and stay consistent about the messages you communicate, the more good habits they will learn. Good luck!