Teaching your kids the value of money, saving, and spending wisely are very important. It will give them a foundation that most kids and even adults don’t have. There is no better time to start to teach your kids about money than at a very young age. It will provide them the right insights and mindset about finances needed to grow up to be more responsible individuals. Remember that schools never teach anything about financial literacy, management, and planning; or if ever they do, its not enough. Schools teach students how to earn a living and an income, but not how to handle and manage money well. As a parent, it is your responsibility to fill such need and let your kid realize the real value and essence of money.
Teaching your children about money isn’t complicated. In fact the simplest of things can make them realize how important money is, and is enough to make them develop good money habits. Here are some very useful tips on how to teach your children about money.
1.) Piggy bank. With the conception of Internet banking and with children getting more and more literate about computers and the Internet, it may seem that piggy banks are a thing of the past. But no, piggy banks are still as effective as they are before. Chances are, you’ve got a piggy bank yourself when you’re still young and try to think of how excited you are every time you put a penny or two in it. That’s the same excitement your child is going to feel.
2.) Teach your children about saving to invest, not saving to spend. A mistake that most people make when it comes to saving is to spend it afterwards. Way back, you might have saved in your piggy bank for a certain toy, dress, or anything that you want to buy. You can teach your kid how to save that way but its not enough, the money that your kid will save will still be spent. Instead of saving up for something, let your kid understand the importance of saving early and let him or her deposit it to the bank. It will give your kid an idea of what banks are and eventually, will develop the habit of saving and investing in them.
3.) Let your kid realize that money is earned. This is another classic way of teaching children the value of money. You can let your kid do some household chores and pay him or her. You can also let them work for your neighbors such as cleaning the loan, running errands, or even help you out in your business (if you have one) for a fee. It will develop responsibility in them and at the same time, it will make them familiar and used to work. A kid that is exposed to work is a kid that will most likely succeed and will not find a hard time adjusting when he grows up.
4.) Give your kid an allowance. There is no better way to put the things that you have taught and they have learned than to let them practice it. Give your kid a small amount weekly and see how do they manage it. Don’t be too hard on them if they spend it but instead, talk to them and let them realize the mistakes that they have made. Change doesn’t happen overnight so be patient with them. Let them commit mistakes with small money while it is still early rather than not teaching them and let them spend all their hard earned money when they grow up.
5.) Practice what you preach. There is no better example than you yourself doing what you teach them. Plan and manage your finances well, don’t spend too much, and if possible or needed, justify your expenses to your children. It will make them smart when it comes to money and they will most likely develop the same attitude you have towards finances. Remember that children adapt to the environment that they live in and will follow what they see in their parents. Good parents make good children, and a financially responsible and smart parents make financially responsible and smart children.
The best person to teach your children about money and finances is none other than you. Groom your children to be financially educated individuals while they are still young because money habits and skills are something that they really need to learn. If they’ve got good financial IQ base, the chances of them succeeding in life will increase drastically.