In a rapidly changing world, where global financial crisis is ever present, teaching your children about managing money has never been more important. The age of the ATM has given children the idea that money can be created on demand, so it’s no surprise they think it’s limitless. But as any adult knows, there is a limit, and that’s one important lesson kids need to learn at an early age.
Teaching kids about money smarts doesn’t happen overnight. These are skills and behaviour that must to be nurtured over time. When kids develop good financial skills from an early age, it makes them more equipped for the financial challenges that lay ahead in adulthood. Giving your child a good foundation and teaching them about money matters is critical for their personal development. Showing children the basics such as how to budget, spending and savings will establish good money habits for life. Here are a few examples of how you could teach your kids money smarts.
Take Your Child Food Shopping
Teaching children to be smart shoppers will help them understand their spending decisions and live within their means throughout life. When buying items at the supermarket, you can explain to your kids how items are priced and that you can get cheaper or more expensive versions of the same product. It’s never too early to live frugally. Point out how saving on different store brands can help accumulate money for something else. Don’t exclude teens from this exercise. When they realize what the total for a month’s groceries comes to, they may learn to be more understanding with their financial demands.
Giving pocket money
Giving your children pocket money in exchange for doing extra special chores, will be their first step in managing money. Make it clear to your children that they won’t be paid for their basic responsibilities. The extra money from travel allowances can be used for savings. Do they want to splurge on candy and toys or are they willing to delay the instant gratification to save for something special? Pocket money can also help children learn about the consequences of losing money and giving money away. Letting your children make a few mistakes like spending all their hard-earned savings on snacks or a particular toy is part of the learning process. Discuss with them the pros and cons of each decision and soon you’ll have kids who weigh the consequences of their actions.
Keep a bank account for your children
It’s never too early to open a savings account for your child. Having a bank account is a very crucial step to teach children the value of money. For pre-school children, start with a piggy bank. It’s a great way to see savings grow. As soon as they get paid by you for the services performed, they deposit it into the piggy bank. Once the piggy bank is full, take your child to the bank to deposit it into the savings account. Explain to them what happens each time money is added to the account. They will love watching the balance grow.
Inspire Entrepreneurship
If you want your child to have a successful life, you should teach him or her how to be successful. Children learn best by doing and actually seeing how money transactions are made.
Teaching children about business at a young age is important for the future of business as a whole. When kids are taught the specific lessons of money management and organizational skills, they can not only apply their skills towards building a business for themselves, but they can also apply the skills they have learned to their personal lives. Earning is learning. With your support and encouragement, young people can see what it’s like to be their own boss and have fun in the process with business opportunities from running a cake sale to helping neighbours with errands. Being paid for their work teaches kids about managing time and money, paying expenses and taking care of customers.
Above all, be patient; it may take a while for children to understand that once money is spent, they cannot have anything else, but they will eventually learn. Give them advice, but allow them to make their own decisions, good or bad. Children will learn the most from personal experience, even if it is a mistake.
