Teaching kids about money may appear like a prodigious job, but it is critical to ensure that your child understands how to handle/organize their money well later in life. There are many good reasons to educate your child(ren) about money. Firstly, you never want your child(ren) to repeat your financial mistakes. Also, if you groom financially educated kids, the biggest possibility is they won’t someday be asking you for money. By teaching them, you’re backing yourself.
If you do not teach your child(ren) how to handle money, someday, somebody else will. And that’s not insecurity you wish to undertake.
A recent survey submitted that about 48.0% of participants who obtained more than 10 hours of financial education report spending lesser than they earn, as compared to 36.0% among others who acquired less than 10 hours.
By transforming day-to-day topics or activities into money lessons, you can play a vital role in teaching your child about finances.
Getting Started Teaching Your Child About Money:
- Initiate money discussions as early as possible:
Although at a very young age, children can absorb the concept of more v/s less. You can acquaint your child with money as soon as he/she can count. Make them count the change as an approach to introducing them to money. Make 2 stacks & instruct them to tell you which one has more coins & which one has lesser. Once they can grasp the value of each type of coin, the same game turns more challenging – “Which stack of change is worth more?”
You can also motivate your child to read the price tags at the grocery store and instruct them what it signifies for a commodity on sale. You can illustrate why you are purchasing at a discount store or why you’re purchasing some items in bulk.
- Curate age-appropriate lessons for your child:
Pre-schoolers & toddlers can comprehend money through simple activities like assorting coins, but when a child is in 3rd or 4th grade, they are ready to discuss more intricate money matters such as budgeting & organizing how to save for an approaching family vacation. As your child gets older, you can discuss how their preferences impact family finances. E.g., when your child leaves the lights on in a room needlessly, you can guide how it elevates the family electricity bill, not to make them feel guilty, but to educate them that simple options can have a big influence on spending or saving money.
- Create a Great Example with Your Spending & Saving Habits:
Children comprehend more from showing rather than telling.
For instance, if you silently purchase a great deal on your phone, your child will find it difficult to soak in the idea of comparing prices. However, if you accompany them for shopping at the store & correlate items while you illustrate what & why you’re doing, they’ll be more inclined to and possibly grasp your lesson.
Although it’s quite easier said than done, don’t surrender to your child’s demands for a new toy when you’re out running errands & refrain from continually buying new clothes or things you don’t require immediately/urgently, to dodge transferring impulsive shopping traits to your child.
- Provide your child with an emolument:
Offering your child an emolument assists them to establish money awareness. It’s wise to make a mistake at 12 with 50 bucks than at 35 with 50K. However, you should provide an amount that corresponds to your child’s age & the ability to handle that money.
Of course, the money you offer them should be in return for taking care of household chores like making their beds, etc. or contributing to other family responsibilities. Grabbing on these duties & garnering money for accomplishing so is the finest first step in developing your child for acquiring a job.
- Allow your child to participate in major family purchases
When your family is contemplating making a major buying such as a new house, car, or kitchen hardware, involve your child in the process. You can teach them about the significance of completing full research before making an expensive purchase, the elements that go into your decision-making & how you correlate products & prices. Take along your child when you are ready to make the hefty purchase.
- Guide your child to track his/her spending:
Understanding where your money is churning out is one of the biggest initiatives a child can take when it arrives to absorbing money-handling habits. By teaching your child(ren) to trail their spending, you’ll aid teach them to be thoughtful of how much they are saving & spending every month.
Make your child(ren) use a spreadsheet/notebook to keep a trail of where their money moves every month. They can track how much they spend & on what, as well as how much they have saved up for expensive items and toward their goals. You may provide your child their own file to record financial statements & receipts.
- Teach your child about deferred fulfillment:
This is quite simpler to teach, even for your youngest child. If you are consistent in delaying most of their desires, your child will not feel deprived. They will soak that all their desires do not arrive easily, instead, they come on birthdays & special occasions, and will no longer anticipate them every time you shop. Teaching the child the idea of delayed contentment can also help in battling the “Buy NOW & Pay LATER” attitude that can lead to credit card debt, later in life. Emphasize the concept that good things arrive to those who wait.
- Encourage your child to give:
Make your child comprehend that it feels more satisfying to give than to receive. Regardless you are teaching your child to give to their friends in need or offering to a charity, this is a vital lesson that will shape their perspective in the future.
Guide your child to pick an issue they care about & fix a goal for an amount of money they would like to offer to a charity targeted on that topic. They can then apportion monthly allowance or money from their job to save up, particularly for their charitable offering goal. This teaches both the significance of saving & the satisfaction of giving.
While everyone desires their child to enjoy healthy financial prospects, parents often forget to render children with a proper understanding of money. With these simple tips, every parent can aid formulate a firm financial understanding & teach their child(ren) wise financial attributes so they can evolve as money-mindful adults.
By keeping it a priority to teach your child about money, you can motivate them to establish the financial literacy they are demanded to draw wise financial conclusions throughout their lives. Even if your child is young, using age-appropriate money discussions will probably lead to smart spending & wise financial management for years to arrive. Regardless of whether you are pondering about your future career prospects, yearn for a deeper understanding of markets & investments, or wish to improve your financial literacy, undertaking some free Online Financial Literacy Courses is well worth the time & endeavor.