Money 101: Teaching Kids About Finances
As parents, you surely would like to discuss a wide range of topics to your kids like having manners, respect, having good values, about the consequences of drinking and drugs, and most important of all – the one which you should not forget – is teaching them about money. It would truly make an impact all throughout their lifetime.
The following post will give you some tips on how you can teach your kids about spending, saving, practicality and money management. Read on and take a better look on the article for a thorough understanding.
When should you start talking about money matters with your children?
The answer to this question is – AS SOON AS POSSIBLE. It is you who should teach such subject to your kids, instead of learning them from others. As the popular saying goes, “Education starts at home,” right? Money is not a taboo issue which should be kept from your kids.
Your kids might not understand technical terms, and it is your responsibility to make it sound exciting and easy for them. You should not put too much pressure on them and make them realize that even making baby steps at a time can help them.
Why is it necessary that you teach them early?
Even at a young age, your children are exposed to going to the mall and supermarkets. Hence, they understand that you need to money in order to make a purchase of a desired item but they do not how money can disappear in a blink of an eye. Along with this understanding, you need to do a proper explanation of the basics so they can grow up knowing the value of money and the proper way to use it plus the ways to save money wisely and helping them make better choices in the future.
Of all the smart parenting tips, educating your kids about money when they are young is a not only a wise idea but an obligation, as well. It is not depriving them of the things that a child must enjoy, but it is more on teaching them to learn the value of money at an early age which can later contribute to their success as they age through life.
What aspects of finances should you teach your kids?
- Introduce the concept of equivalency to your young child.
Let them learn the different sets of money including coins. You can even play a game with your child acting like you are in a store and you play the part of a customer and your child will act as the cashier.
- Teach your kids about allowance as they enter school.
Usually, allowances are based on a child’s age. You can even let your child do some light tasks at home in exchange for his or her allowance. Communicate to your child what you expect him or her to buy from the allowance you handed him or her (i.e. food, drinks, toys, etc.). If they used up their entire allowance without considering the remaining days before he or she receives another from you, let him or her face the consequences. The hardest part is being consistent with your rules.Make your child understand that the allowance is not a form of punishment or reward but a way to teach him or her about managing his or her money.
- Let them know the concept of both debit and credit cards.
Teach your child the connection of these cards to money. You can opt to take him or her to the bank with you as you deposit or withdraw your money and clearly explain the purpose of each visit.
- Educate your kids on how you earn money and the value of a job.
You can even discuss with your kid how he or she can generate his or her own money. Teach your child how you do the budgeting on monthly expenses like house fees, food, transportation expenses and others.
You can insert then the concept of needs and wants for your child to differentiate these two.
- Share personal previous spending mistakes.
As they say, experience is the best teacher. It can be an opportunity to demonstrate to your child how to do smart spending decisions. Sharing your experiences and what you have learned from these can help your kid picture clearly the consequences of each wrong decision.
- Teach them the value of saving.
Encourage your kid to open a checking and savings account under his or her name. This is one good way to have your child practice what you have taught him or her from the very beginning. You can even have a goal together and you can only do that after you have saved enough.
How can you teach proper financial management to your kids?
First of all, you need to be a good role model to your kids when it comes to money management. If you are an extravagant spender and tend to waste money, your kids can acquire that attitude of yours in their spending habits. Should they find themselves in a financially difficult situation due to their choices – then may be the first people to regret it are the parents. The biggest responsibility in teaching kids about the value of money must be shouldered by the parents or the guardians, themselves.
Learning from the above-mentioned tips, you teach your child not only the value of money but the sense of being responsible for their actions. It is important for them to understand that they have to work for their money instead of expecting it from others.
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