Teaching Kids about Money: Set Good Habits
With life’s uncertainties, one of the best weapon a person can have is his skill on how to manage his finances. I am sure you all know too well what a dilemma it is to find yourself with no savings and unable to meet financial obligations.
It sucks and we wouldn’t wish it on anyone especially on our children. So our best bet is to teach our kids as early as possible how to treat money with respect and use it wisely to their advantage. Money skills that we hope we were born with but not and which only time and experience can teach. So how do we go about making our children money-wise by the time they make their own decisions?
Lead by example.
Show them how budget savvy mum or dad is. Inform them of any money matters that may require their assistance and cooperation say, eating out less for the next week to save enough money to pay for the heating. Exhibit money wise values such as shopping smart, saving, making lists, making goals and investing. They learn more from observing you than from you merely just telling them about saving tips. Let them sit down with you when you do your budget and explain items and encourage them to share their thoughts. By showing how the home is run well by managing the financesl, your children will learn the value of money and spending it wisely.
Give them a fair go.
When they are of the right age, give them extra freedom to decide how they spend their allowance. Instead of giving say a dollar a day, give them $5 every Monday, good enough to last them for a week. They’ll eventually learn that spending too much too soon have consequences and that saving up for something big or for later may prove more rewarding. Have faith in your kids and show your trust that they can make prudent money decisions as young as they are.
Give them tools.
Teach them how to make a budget and exhibit how expenses and savings correlate to each other. Open a kid’s bank account for them to keep their money “for later”. You can also gift them with money jars to save on and encourage them to label each as “for me”, for gifts, or even for charity.
Provide opportunities for them to earn.
Instill early on that should they need something that comes with a huge price tag, mum or dad will not buy it for them. That is why it pays to have enough savings and earn as much money as possible by working. Giving them extra chores that are not part of their daily chores such as gardening or helping dad clean the car will teach them how hard work pays off, literally.
Caution them about marketing and materialism. Inform them how advertising work and teach them how to differentiate between a need and a want. Give them tips on how to prolong the purchase process like saving up for a cool gadget or giving themselves a couple of weeks to fight the impulse. Showing them early on that the family need not have the latest gadget to be happy will definitely go a long way.
Annie is an Australia-based mom and frugal blogger who writes for Home Loan Finder, the free mortgage comparison tool (for Australian citizens only). Annie tweets viral marketing and money-saving advice at @ViralMomTweets
cc licensed flickr photo shared by Pink Sherbet Photography