Understanding the concept of money and how to earn, save, and invest is an essential life lesson for your child. They will be dealing with money their entire lives, irrespective of the profession.
Therefore, financial literacy is a necessity. Unfortunately, while developing kids for sports and education, this always takes a backseat. Mostly because talking to young kids about money is challenging, but you must start somewhere, and the younger they are, the better.
Also, financial education helps a kid in more ways than you can imagine. It teaches them discipline, organization, and responsibility. Questioning how to teach your kids to be financially responsible? Try the tips mentioned below.
Talk About Money
Get rid of the taboo around money by talking about it. Talking about money is good when you are having conversations with your kids, even the youngest one.
But do not do it negatively, like, ‘Oh, these bills are stressing me out.’ Positively talk about money. For instance, talking about the savings you made on a grocery bill helps.
Other phrases that financial education courses teach us to use with kids are ‘saving for a vacation’ or ‘saving for a rainy day.’
Teach Them to Budget
Teaching your kids to budget is an ideal step in their financial education. It is fantastic if they can learn to manage their budget and spend within the limit from an early age.
For instance, you can ask them to do chores and give them an allowance. Younger kids can get an allowance weekly, while teenagers can get an allowance monthly.
After your kids turn 16, if they find jobs or internships that pay, like at a convenience store, it helps, too. An allowance allows them to save or spend on things they like.
It also teaches them to spend within a limit and hold onto their money for a month or week until they get payment again.
Involve Them in Your Shopping
Most young kids do not understand the concept of money. That is why it is ideal for showing them that everything costs money.
You can do this by involving them in your shopping and not just taking them to the market. For instance, tell them why you are choosing one brand if you are comparing two brands.
Other than the ingredients, their costs matter; you should tell them. Encourage them to buy one thing for themselves and pay for it with cash. Talking to the person behind the counter and exchanging money helps them grasp the financial side better.
Discuss Wants vs. Needs
Explaining the difference between wants and needs is necessary for your kids. You know how easy it is to spend a lot on wants. Therefore, sit down with the kids and let them know the difference.
Food, healthcare, basic education, clothes, and shelter are ‘needs.’ Drinking coffee, and buying toys, new fancy clothes, bikes, and more are wants you can live without.
Explain to them that they must save and not spend everything on what they want. Creating a budget to buy what they want is a good lesson. It will help them save more money in the future, too.
Help Them Set a Saving Goal
Teach them how to save when they are young. How? By setting goals for them and explaining the process to them.
For instance, if they want to buy a toy like a Marvel LEGO set, ask them to save for it from the allowance they get. If the toy is $50 and they get $15 every month, tell them to save 10 dollars every month.
This way, in five months, they can buy the toy. They can save more if they get an allowance from relatives during meetings or holidays. Slowly explain this process by demonstration. It will help them be a great saver in the future.
Have a Clear Jar for Savings
Do you use a piggy bank to help your kids save? It is an ideal idea, but change the jar to a transparent one. When the kids can see their money grow, it encourages them to save more.
Teach Them to Be Givers
Once they save money, teach them to give a portion to charity or the church. It shows them that even with little money, you can help others. And why saving does not just help them but others too. It also encourages them to earn and save more.
It is never too late or too early to start teaching your kids about finance. You are responsible for ensuring your kids have a good relationship with money.
They will deal with it, and without an understanding of money and how to save and invest, being in debt isn’t far behind. So, use these tips to educate your kids about money today.
