As a parent, we want to give the best for our kids. This doesn’t necessarily equate to providing the most expensive clothes or the latest toys for them. It means wanting our child to be genuinely happy and safe even without those things. We, no doubt, will spend money on our kid’s needs. What if you can’t buy something he asked for? Then you should read this article on how to teach kids about money.
Not everything we afford to buy, and it’s worth to buy especially the expensive and unnecessary ones he asked for. Thus, it is necessary to explain where the money comes from, NOT made in ATM machines and neither does it grow on trees, but rather from the hard work and sacrifices we made for our family.
We work round the clock for them to have a secured future and we establish a foundation that they can build upon as they grow older. Financial literacy is an important life skill that isn’t consistently taught in schools, it’s mostly up to us as parents to educate them and set them up for the future so they know how to manage their financial affairs and also for them to obtain financial stability.
How to teach kids about money
Not sure how to start? Here are 5 effective ways on how to teach kids about money:
Start them young
“As soon as you have a kid that can count, it’s a great time to teach them about money,” said Tanya Van Court, founder and CEO of Goalsetter, a family-friendly goal-setting app, and a mother of three.
There’s no reason to wait for our kids to reach a certain age before we teach them the importance of money. Financial education should begin at home. Give them the idea that we need money to buy them toys and money is a finite source. Kids just see money popped out from ATM machines, followed by parents using the money for shopping and buy food. They don’t understand where the money comes from.
Explain to your child that we work for money and we save them in a bank that bank keeps it safe. We will use the money to pay for our daily food, shopping, pay bills, and loans. We can’t afford to buy expensive and unnecessary things as they will decrease if we do not manage them wisely.
Practice saving up
The best way to teach kids to start managing money is to give them something to practice with. Give your child an allowance, then have them divide the money into different categories—could be for food, for piggy bank, and for toys. This way, we teach our kids to control their finances, and also, we teach them not to overspend as they follow a certain budget that they have put up on their own.
From our child’s perspective, they will most likely see money as something that they should only spend since they always see us buying things. It’s crucial that we teach them that money isn’t just for spending, but for saving as well. Get your child a saving jar or his own piggy bank where they can “deposit” their money. Saving teaches discipline, delayed gratification, and goal-setting. It builds security and independence.
“With young kids, though, you’ll likely have more luck teaching them to save for short-term goals—rather than for their future,” says Tim Sheehan, co-founder and CEO of Greenlight, a debit card for kids with parental controls and a father of four.
Short-term goals will help kids learn the value of delayed gratification and curbing impulse buying. Teaching kids to wait patiently for something they want. Little by little, they will learn the ideas that waiting pays off.
Saving and budgeting can also be a family activity. Getting your kids involved in a discussion about money can help them distinguish the difference between “needs” and “wants” and they will also learn how to prioritize and weigh where money is needed the most.
Hussle for a dime
We all want our kids to appreciate every single dime they receive. You can give your child an allowance. However, if we want our kids to understand the concept that money is earned, we should consider giving them age-appropriate tasks to earn their allowance.
This doesn’t necessarily mean that you have to pay your kid for every single task or home activity they’ll do. There are some chores around the house that they have to take on without pay because they’re expected to help, but if they want to have an allowance, they are required to complete certain tasks. This is a great way to physically demonstrate how money works and encourages them to save more and spend less.
Learn smart spending decisions
Every family member should follow a certain budget for themselves to avoid unnecessary spending splurges. We can tell our kids that what they have earned the whole week was all that they would get and it’s all up to them to manage their money until the next week. You can get them a notebook, so they can track their expenses and how much money they have left. They can also use that notebook to list down all their goals, plans, and even write down the things they’d like to buy using their savings. Seeing what comes in and out of their hard-earned allowance teaches them how to properly handle their money.
A huge part of financial literacy is learning how to show kindness and doing good with money. Teach them the value of giving to others—of helping people and making them happy. Let’s help our children understand that giving and sharing can be attained without spending too much. Discuss what organizations or causes they want to support and assure them that a little amount goes a very long way.
Most importantly, it all starts with us—parents. If we want our kids to develop good spending and savings habits, they need to see us walking the talk; to practice what we preach. If we want to instill good habits that will serve our children well, they need to see us making smart choices, too.
Teaching our kids about money requires extremely long patience and determination, but remember that we are teaching them a lesson that they will find beneficial for the rest of their lives.
Read about ” Work-life balance for moms“