Teaching your kids to be skilled enough at managing money requires constant mentoring to help them make the right decisions and get used to them.
Kids develop financial understanding and become intuitive around five to seven years on the influence of money on their parents. Although children are unlikely to perceive the processes behind money matters, they have a limited idea of why it is done, and how it is essential.
Here are a few tips on introducing and guiding your kids in financial education.
Importance of coins
Start your introduction to the concept of money through coins. When the kids look at the piling up of the coins in a jar it gives them the satisfaction of achieving something big. Encourage them to continue saving the coins in their piggy banks so that they understand the value of money.
Set an Example
Kids are masters at observing and analyzing things because their minds are ready to store information in whatever they see. Involve them whenever you are writing and depositing a cheque, using an ATM card, or paying the bills, groceries, etc. Avoid impulse buying in your kid’s presence, and think well before making a purchase. Teach your kids the right money concepts.
Open a Savings Account
Opening a savings account for your kid will show them the growth of money. As part of the exercise, educate on interest rates, checking accounts, and all the related processes.
Give an Allowance
When your kids get an allowance they will realize the need for basic budgeting and a rational approach to spending money will set in. A primary step towards money management begins here.
Add Some Fun
If you are serious and persistent in imparting knowledge about money to your kids they can be under stress so have some fun, after all, they deserve it in their age groups. Games can be very effective such as money games, online games, and homemade games are the options for making the sessions interactive and enjoyable.
Mistakes Are the Stepping Stones to Learning
Let your kids commit mistakes while taking decisions on their spending, even if it means wasting money. You can try a payment app to keep a check on their spending and later show them where they overspent.
Let Kids Earn Money
Allowing kids to work gives them a great platform to experience earning and hard work. One of the common ways to train kids is to expose them to summer jobs, working for parents by giving them an allowance.
Kids should be given an opportunity to practice budgeting like planning for a family event. Guide your kids on how spending on one thing must not result in a shortage of funds for other things. Track their spending by using a payment app and study the behavior.
The main goal of teaching your kids about money management is to register the value of long-term savings and debt in their minds. Break down and discuss the expenses of houses, college, marriage, and retirement as a motivation and a head start.
Inspire your kids to achieve financial milestones by setting goals and working with dedication. Goal-setting is the last step before your kids put their minds, efforts, and focus to accomplish it.
Parents have a larger role to play when it comes to leading the kids in the correct path as they are sure to follow what you do. Complaining about money in front of kids will not serve the purpose and they might be scared to reach for anything that is financial. Dedicate quality time to discuss in detail the nuances of saving money for the long term.