Kids who learn the value of money early on are less likely to go broke later in life. Raise money-smart children by following these tips.
Parents need to teach children the value of money and saving early on. Financial literacy will greatly help them throughout life. While the school can reinforce these lessons, it has to begin at home. This can make a huge difference in their overall success so make sure you take the steps to guide them early on.
1. Start the money talk early
Begin by saying why you work and how important it is for the family. Explain how everything they use daily costs money and how work plays in getting that, as well as the concepts of saving and paying bills. You can get them to start handling money with a piggy bank and teaching them how to save.
2. Make family shopping educational
Get them involved in family shopping so they learn how much money is required for various everyday items. They will learn how to compute for prices while appreciating the importance of spending wisely. A good exercise is to send them to one section of the market with a list of products you need purchased. Give them a budget so they can figure out how much each costs and how the money will fit.
3. Give them a budget
Self-discipline in money management will come from freedom. Give them the opportunity to make decisions over spending by giving them a budget. Let them buy school lunch from their allowance. They can either spend all the money and have nothing leftover or save a bit to buy a toy on the weekend. Take them on personal shopping trips too and give them control over their money so they learn to think about what they really want instead of going for impulse buys. Make the trip more educational by letting them do the math.
4. Let them learn from mistakes
As the kids go on learning, mistakes will definitely be made. Take these as an opportunity to teach them valuable lessons. Do not bail them out. Let them work for the money or make them wait instead of providing them handouts. You can also teach them the concept of borrowing and lending by explaining how they will have to pay you more if you gave them money. It is important for them to learn these things now than later on.
5. Exemplify good money habits
Be a role model for your child. They learn best when they observe you making smart decisions about money. Show how you work and get a salary for it, how you have a savings account, how you write down a budget before shopping, and how you plan spending so you can afford something you want. Talk about how certain money habits make a huge difference in life and how it can either create a life of comfort or difficulty. There is no principle that you cannot discuss with your son or daughter, just make sure you do so in an age-appropriate manner.