As an adult, you would know the importance of personal finance and money management. A person who is adept at managing money can live a happy and independent life. On the contrary, wrong money decisions can not only land one in debt but also cause mental stress.
It is unfortunate that despite its significance, personal finance is not a part of the curriculum at schools and colleges. You can, however, take the onus of teaching money management to kids at home. With your encouragement and support, they can grow up to be responsible adults.
Here’s how you can go about it.
Talk About Money
More often than not, parents avoid talking about money and finances when their kids are around. Understandably, they want to protect their children, but in the process, they could be making an irreversible mistake. This situation is no different than expecting an adult to cook who has never stepped inside a kitchen.
If your children are big enough to understand it, introduce them to the concept of money. Tell them how you work hard to provide for the family and how everything they demand costs money.
Secondly, kids learn by example. Any irresponsible money behaviour on your part is more likely to pass on to them. Instead of buying things you do not need, spend your money wisely to set the right example for them.
Teach Them To Make Sacrifices
Most adults make rash money decisions as they want to live a luxurious life of abundance. They use their credit cards to pay for their expenses and end up in a spiral of debt. They do not understand the consequences of using a credit card for bad credit.
You can teach your children to make small sacrifices instead of buying everything that they put their fingers on. For instance, ask them to let go of pizza if they want to go on a school trip next week. You can think of innovative ways to teach them delayed gratification so that they can grow up to happy and content adults.
Give Them Responsibility
Try to be creative with your children’s allowances. For instance, you can introduce the concept of earning by giving them more allowance if they help out with house chores. You can allot more money for challenging tasks like mowing the lawns.
This way, they will not only learn to be responsible but with time, also know that money doesn’t come easily. When they turn 16, you can also encourage them to take up small jobs like babysitting or helping your neighbours with their household chores. If they are keen, support them to take more meaningful jobs as long as it doesn’t impact their studies.
Let Them Save
Most parents work hard to provide the best education to their kids and make compromises in the process. While it is alright to save for emergencies, discuss with your children how they will have to repay their student loans.
Similarly, for other needs such as a car or a new phone, ask them to save if they can. If they are too young to pay entirely for their needs, ask them to save a portion for it. When they have to put their money, they will value these belongings more and will be more careful while handling them.
Introduce Them To Banking And Investing
More often than not, adults are introduced to banking services only when they start earning. They are not even aware of different investment products that are available in the market. Consequently, they feel lost when it comes to managing their money.
To make your children money savvy, open their bank accounts at a young age. Teach them basic banking services like cheques, debit and credit cards.
Apart from this, tell them how they can grow their money by depositing in investment instruments like low apr loans. If you trade in stocks, you can tell them how it works. The goal should be to make them aware so that they don’t have to start from scratch when the time comes.
Let Them Make Mistakes
As parents, it is natural for you to have a protective instinct when it comes to your children. You may want to shield them from all the hardships that you had to face as an adult. As a result, when children leave their parents’ nest, they feel lost.
To avoid this situation, allow them to make mistakes. For instance, when you go shopping, let them take the money they have earned and spend it how they want to. You may not always accept their choices, but it is crucial to show respect.
They may regret their shopping after coming home. Instead of criticising them, be gentle and teach them to make smart choices with their money.
You can also guide them to delay their shopping by a couple of days to make the right decisions. For instance, you can ask them to wait it out when they really want to buy a new dress or a gadget. With time, they will learn to distinguish between their needs and wants, and also reduce their mistakes.
Involve Them While Budgeting
Children are sensitive and may not take it well to hear from their parents that they can’t afford something. A more practical solution to explain how money works is by including them in your budgeting process. You can make it a monthly activity and make it as complex as their age.
If they are still too young to understand household expenses, you can ask them to budget their allowance. The key is to explain the concept of how you cannot spend on a dress today because you are saving to buy something tomorrow. When they understand this simple logic, you will be amazed to realise how they will adjust their wants to fit the budget.
Conclusion
It is often said how the first school for any child is her home. It is no different with money lessons. Teach them how to manage money, and they will grow up to be happy individuals.
Of course, in the process, you may have to make certain compromises. But there is nothing better than to safeguard the future of your children.
Leave a Reply