Six Ways To Help Your Kids Grow Up Financially Smarter
It isn’t uncommon for people to have spending money come to them more naturally than saving it – and this is because managing your money is not something you’re born to know. You have to learn it. Money management is an important practice that can forge a great practice in kids when they reach adulthood.
It isn’t only about saving either — it’s all about budgeting, making informed decisions and setting financial goals, building a financial foundation, and developing good financial habits. This may seem like a whole lot for you to impart on your children, but parents, it really isn’t that hard! Here are five great ways of helping your children grow up with better financial habits!
Introduce Them To Money When They’re Young
This can be something as small and simple as a piggy bank. A piggy bank is something a child even younger than five can use, simply slotting in a couple of coins as you give it to them. When they grow older, you could introduce your kids to three separate piggy banks. Label them each differently, one for spending, one for saving, and one for giving. Help your child grow into the habit of putting money into each of those three piggy banks whenever they get money. Just imagine how differently you would think of money and how different your finances would look if you grew up being taught to put away a bit of every amount of money that comes to you!
Discuss Finances With Children
It really shouldn’t be a taboo table topic because money is an important part of our lives, and everything we do or need revolves around money. Money is something that is intertwined with goals, desires, values, and more. Making money an everyday topic is a good way of helping your child learn a little as they grow older and helping them grow used to the topic and open up with questions of their own. The conversation is a great way to make children feel comfortable and also for you as a parent to gather an understanding of what your child’s perception is, and guide them accordingly. As kids grow, you can show them your salary and your bills and your budget plan and how you handle your finances. It will be a world of help one day for them.
Help Them Earn Their Own Dough
It isn’t a new idea that children are given an allowance for them to spend on whatever they would like, but instead of handing them an allowance, teach me to earn it instead. For example, for the additional chores that they do, you can offer them money as a reward. This helps them understand that money doesn’t come easily and that it takes work to earn money. It will also help them to understand how long it takes to earn money and how quickly it can be spent, teaching them to make wiser choices with their spending. In fact, older children can even take up odd jobs in the garden, washing cars, walking dogs, or even part-time babysitting to make extra money for their purchases. This also helps kids feel proud and responsible.
Teach Them Wise Spending
If there are toys, clothes, accessories, or other purchases that your child wants but does not need, encourage them to save up for those purchases and to either pay in full for smaller purchases or at least pay 25% or 50% of larger buys. This will help them cement their understanding of how money works, how you have to work harder if you want nicer things, and how you need to budget yourself if you want to make extra purchases. Being able to distinguish needs from wants is also a very important lesson that kids can learn from this exercise.
Encourage Further Education
Encourage your children to further their education, especially in finance, because this will greatly increase the chances of your child enjoying successful financial independence. Have them accompany you on seminars or encourage older kids to take short courses in finance. There are also many easy-to-read books that are specifically written for children and aim to improve their understanding of finances and money matters. Buy a few books and have your kids read them, and make sure you choose interesting books that are targeted for their age group so that they are not bored by them.
It doesn’t help to foster good financial habits and to teach children how to budget and be wise with spending if they don’t learn about waste. Being wasteful means you are wasting money, and children can best learn this by learning that there are consequences when something is wasted. For example, if they are careless with the liquid soap and spill it down the sink, then it is wasteful and there has to be a consequence. In this case, your child will have to spend money from their own savings to buy another bottle of liquid soap since they wasted one. This can be extended to many examples in the home. If they want to be overindulgent and buy more sweets and chocolates, they will have to put in money of their own towards the groceries, for example. The possibilities are endless, and so is the life lesson!
Before you know it, they will be all grown up! So it’s best you get started on employing some of these tips in your family to help your child enjoy the benefits of understanding money form a young age!
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