Teaching children about money may not be something that you think you can do if you are not a financial genius.
But don’t worry because given the fact that you are an adult means that you already know more than they do about many different things, including money.
Increasing consumer debt and bankruptcies has made it mandatory to educate the younger generation on sound financial management.
Children love to learn, especially very young children.
If you have children, you have probably already noticed that they want to absorb as much knowledge as they can about every topic possible.
Children are naturally curious, and they learn fast.
Apart from teaching them good manners and how to brush their teeth unsupervised, it is important they also learn basic money management skills.
Starting early to talk to them about money might not make them billionaires before they’re 22 but will give them an edge in the turbulent journey to young adulthood.
Children who are exposed early to financial knowledge are more likely to become better at business in the future. They will also become good at investments and will most likely have less debt.
Learning about money doesn’t have to be boring and dull. Make it a fun and lively experience with these tips to teach your kids about money.
9 Tips To Teach Your Kids About Money
#1. Lead By Example
Children learn best by observing and emulating. Exhibiting sound financial judgments and practices will influence the way they think about money and instill the same qualities in them.
Make use of everyday opportunities that arise to explain to them the reasons behind your choices. Explain why you buy grocery in bulk or why you chose not to buy the PS4 even though you could afford it.
Involve them in shopping for the household, so they understand bargain hunting and price comparisons.
#2. Give Them An Allowance
A weekly or monthly allowance will go a long way to teach kids how to spend wisely and save.
You could tie it to them performing extra age appropriate chores around the house, so they appreciate the fact that money doesn’t fall from the skies, and that it is a result of conscious effort.
You should increase their allowance as they grow older
#3. Allow Them To Make Spending Decisions
The point of giving them an allowance is to make them learn how to manage money. Decide on what level of expenses their allowance is to cover, then make them accountable by giving them a free hand in spending it.
#4. Experience Is The Best Teacher
Letting them decide whether to blow their monthly $10 stipend on a Lego set or set it aside for a rainy day helps them learn by experiencing first hand, the consequences of their actions. And this is the best way to teach your kids about money.
To let the lessons of a bad spending choice sink in, do not offer a bailout once their allowance runs out before the agreed period.
#5. Open A Savings Account For Them
Open a savings account in their name with your local bank as soon as they are old enough to count. Ensure they are fully involved in account opening process to arouse their interest and get them more involved in learning financial prudence.
They should be allowed to decide the portion of their allowance and cash gifts that will be deposited in the account.
Take them along with you on visits to the bank and encourage them to ask questions about how banks work. Also, teach them about the concept of interest and the benefits of saving for the future.
Inculcating in them a lifelong habit of saving will go a long way in securing their future financially.
#6. Teach Them Budgeting
Planning your expenditure is difficult even for an adult, surrounded by bright, shiny products as it were. But it helps to teach your kids early on to save for a future worthy goal. This means working with resources, which are always scarce to satisfy wants which are always endless.
They should learn to prioritize and put off making purchases (no matter how attractive) which do not align with their set goals.
#7. Teach Them Basic Investment
After learning to save, your kids should be naturally taught to invest. As soon as they are old enough to grasp the concept, teach them about growing their money faster with stocks.
Show them how to research companies and develop a healthy appreciation of the risks and rewards which lies at the heart of investing in the stock market.
Encourage them to invest in companies they know and are interested in.
#8. Encourage Them To Earn
Teach your kids about money in every aspect. This includes saving, budgeting and investing skills are worthy goals. Encouraging them to earn money cranks things up further.
Pay them for taking on extra tasks around the house and let them know it’s OK for them to get paid for babysitting, mowing the lawns and running errands for neighbors.
When it comes to children, understanding that money should be earned is just as important as learning how to save money.
#9. Teach Them To Delay Gratification
Make your kids know that they can put off buying that fantastic toy now and save up the money for something better.
They should know that toys and other luxury items are only bought occasionally (eg: birthdays), teaching them to delay getting what they “want” will further encourage them to live within their means and avoid racking up credit card debt in the future.
There are 9 simple tips to teach your kids about money. By learning about money and to be financially savvy early in life will make them cultivate the habit of saving and judicious spending.
They will grow into adults who are better equipped at managing their money and are secure financially.
Author Bio: Bernz JP – Blogger and owner of Moneylogue.com. He is passionate about personal finance the stock market, and a digital marketing addict. He also loves to read books on entrepreneurship and technology and always on the lookout for new opportunities.