The decision to impart basic financial lessons to your children is the right step in shaping their attitudes about money and how to spend it. A study by the Personal Finance Education Group revealed that about 98% of children from eleven to seventeen have some money of their own. Ignoring the responsibility of teaching your kids how to be financially-savvy may lead them to make unwise financial decisions with long-term impacts. Here are some ways you can teach your children about finance.
- Do not engage in impulse buying
Have you ever gone out shopping with your kids, and they began to hound you to purchase something entirely out of your budget? It is tempting to give in to their puppy-eyed pleas but fight it! Let them understand that you came out to shop with a budget, and anything extra would affect your planned list. Explain how it may be more beneficial to wait it out until another time. You could employ a strategy to deny the kids something else you already planned to get them in exchange for what they are demanding; this would teach them to make the right decisions.
- Show them their toys cost money
Are you aware of how your kids may misuse their toys and end up damaging them? Instead of cautioning them verbally, you could consider showing them how much it costs to buy them. For example, if your child has a piggy bank, make them take out a few pounds and go with them to the store to buy another set of toys. Even for a five-year-old, this practical lesson makes them feel first-hand the emotions that come with parting with money.
- Make your kids earn commissions; not allowances
Avoid the habit of handing out money to your kids simply because they ask for it. Regardless of how much you love them, this will make them nurture a sense of entitlement, making financial independence difficult in the future. Institute commission earnings and not allowances; when your child completes chores, you can pay them according to a set payment plan, complete with what makes them eligible for pay. However, when you notice they made an extra effort to perform their chores, add a bit more as an incentive or bonus. Doing this teaches your child that money is earned and is worth saving.
- Use a transparent piggy bank
It is always a great idea to foster the habit of savings in young children. However, the trick to making your child see their money ‘grow’ is by ensuring that their piggy bank jar is a transparent one; every coin or note you drop in there is a visual indicator of their ‘wealth.’ It’s a wonderful way to build their desire to grow wealth through completing simple chores or being disciplined. You can also use it as an opportunity to teach your kids strong lessons about money and finance. Consider using services such as Debt to Success System BBB and make your lessons practical and easy for your child to comprehend.
It is never too early to begin to impart simple financial lessons to your kids. Money management is a skill worth grasping very early on in life. What you should do is maximize every opportunity to make these lessons fun and practical. Remember that children learn through play.