You likely struggled with debt for years before you learned the basics of money management — but wouldn’t it have been so much easier if you learned financial literacy when you were young?
A study from the University of Cambridge determined that most children develop their lifelong money habits before the age of seven years! Your kids learn from you the moment they enter the world, so it is imperative that you demonstrate good behavior, even when it comes to financial matters.
Money is a tool, and no one should be afraid or nervous when handling money. To ensure your kids feel confident working with money, you should give your toddler opportunities to experience cash first-hand.
Toddlers who are old enough to participate in even the most basic chores, like picking up their toys and books, making their beds, and caring for a pet, can earn small commissions that can fulfill their monthly budget. As your kid gets older, they will gain a greater number of more complex chores, and you should increase their commissions accordingly.
You should start talking to them about the future and demonstrating how to use a budget maker to accommodate all their wants and needs. You might even work with them to set up a college savings fund, which will need plenty of time to grow before your child takes advantage of it.
You can demonstrate opportunity cost while you are grocery shopping when your toddler is interested in buying a favorite snack. Though they should be allowed to spend their savings how they wish, you should take the time to explain that if they purchase something impulsively now, they won’t be able to do something they have been saving up for, like buy a coveted toy.