Talking finances and money to kids isn’t complicated and something shouldn’t be ignored anymore. Gone are the days when it is fine we reply saying money “money doesn’t grow on trees”. This is the piece of financial advice we were handed those days and it ended there.
If we want our kids to manage their money without issues in future then teaching them about financial responsibility at an early age is the solution. A habit that can take more time to build is saving. We can clearly say that quite a few adults are yet to master it.
As parents we want our kids to have the best. Not only the best in toys, dress, education but most importantly we want them to be safe and secure. A key lesson that needs to be taught which will guarantee they will do well is the lesson about money. This lays the foundation which will make them do well in life.
Many of us now wish that we could have been taught more about managing money. Missing the opportunities and being reluctant to talk about finances are reasons many parents give on why they couldn’t discuss with kids.
Children are very eager to learn about the wisdom of finance we have. So giving them the gift of financial literacy would be the best foundation we can do for them.
Here are ways you could start teaching money
Start early
Math forms most part of money knowledge. So the learning about money could start as early as when they start learning math. What is money?Where and how it is used are the first and foremost concepts.
Also they need to know where it comes from. They need to clearly understand that it simply doesn’t come out of the wallet. Make them understand that we get paid when we work. SO no work results in no pay. This would make them understand that to earn they must work.
Give allowances
Assign a chore or ask them to run an errand and reward them. As they age you can increase the amount. Teach concepts like save, invest and spend. In this way they will know to allocate what they receive. Creating opportunities for them to earn is a great way to learn about money and to understand that their work is rewarded.
Teaching them to save
It is important to let them know that money is not only for spending but also to save for future. Saving will help in teaching discipline, gratification, setting goals , planning, being prepared and most importantly feeling secure and independent.
Giving them chances to set short term goals like to buy their favourite stationary or favorite toy will make them more enthusiastic to save. TO begin with they could start with saving in a piggy bank and then proceed to opening a savings account once they are old enough.
Make them understand and make decisions
Tracking where money comes from and how is it going to be spent teaches children to make smart decisions. Make them understand that they can pay people to get things done for them when they grow up or also spend in getting things for themselves. The key here is for them to understand that it is going to cost them either way.
Involve them in financial decisions and ask opinions
When I say ask opinions it doesn’t mean you have to go by it. It will help in boosting their morale that they are becoming mature and capable of becoming a good adult. They will also get to know how you handle the situations and learn to model you. Start this in their teens, the goal here is to talk about money freely and not getting stressed up.
See where they go wrong and grasp the situation to teach
There might be situations where the kid spends the entire money , or cable bill rockets and so does electricity. DO not cave in. Instead use this opportunity to make them understand that if money is gone it is gone . Let them know that extra TV hours count, leaving the light on counts. This will make them realize and start acting responsible.
Work on your relationship
Kids learn by mimicking our behavior. So if they notice that we are stressed, spending beyond boundaries and keeping the finance scare they are most likely going to become like you. They cannot think it is normal if you spend money beyond limits so act responsibly and be a good role model.
This also sends out a strong message that you practice what you preach. Talking to them about saving and investing and on the contrary ending up be scarce doesn’t picture a good role model.
Teaching differences
Make sure kids understand differences between needs and wants. Let them be responsible for the decision they make to spend money on a trip to circus or a video game. So later they cannot blame you. Let them enable themselves by making a priority on what do they want first. Making them understand what is their dire need and what is a want helps them make better decisions.
Gratification
Kids need to understand that they don’t always come with a bag of goodies after leaving a store. Visiting every time doesn’t mean we spend and buy stuff. The goodie will make its way during an occasion and not during every store visit. Making them save money for their most wanted goodie is another way they learn to save. And once after they purchase you could see how thoughtfully they make use since it came out of their own money.
So it isn’t late if you haven’t started. There is no right time and no time when it denotes your lagging behind. If you are reading this and plan to start, I wish you the best.
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