08 Feb 6 Smart Ways to Teach Kids About Money
Want your kids to learn how to save and manage money? Schools don’t really teach our children about this, so get proactive and help them manage future finances as early as now.
Holidays are officially over and school had resumed. For most parents, you know what this means—additional budget to allocate for your kids’ allowance and other school demands.
Raising financially savvy children would mean teaching them a variety of aspects from budgeting to planning, earning, and saving. More than just giving them an understanding of how important a dollar is, you have to instill in them fiscal responsibilities to help them prepare for life in the real world. Money management is a valuable life skill and it is never too early to teach kids about economics.
Warren Buffet said that the biggest mistake parents make in terms of teaching their kids about money is starting late. For him, parents need to start teaching kids about the importance of managing money at an early age. Sometimes they wait until their kids are in their teens before they start talking about managing money when they could be starting when their kids are in preschool.
So here are some ways you could try to teach your kids (for every age!) how to handle money:
Use a clear jar to save. The piggy bank doesn’t really show the kids how much they have saved. If you give them a clear picture, letting them see their actual savings, it will make them excited and make the whole saving journey more fun and enjoyable.
Turn grocery shopping into a teachable moment. Ask your kids to come with you for grocery shopping. This is a great opportunity to teach kids about comparing prices. Teach children how to shop by value rather than brand. Remember to always shop with a list. Shopping with a list helps children understand how prior preparation can lead to great savings in the end.
Show opportunity cost. Teach them the value of decision making. They should be able to weigh their priorities and make them realise that each of their choices has a consequence. It’s like saying, “If you buy an iPhone X, then you won’t have the money to buy those clothes.”
Consider commissions, not allowances. As early as now, train them to work hard for the money they ask. You can split up the chores and pay them commissions for completing these tasks afterwards.
Open a bank account under their name. Putting it under their name makes it more “legit” for them considering anything that goes in and out of that account is within their responsibility. Consider transferring a weekly or monthly allowance and it will be up to them how to spend and save it. It will be their sole responsibility regardless if they’re able to spend all of it or manage to save a whole lot of it.
Help them find a “job.” During their school breaks, assist them in finding resources where they could earn money. It could be a part time job at your local shop or restaurant, an online job, or even conducting a thrift sale at your garage.
These are just some of the ways you can try in teaching your kids how to successfully manage their money. You can modify some of the steps and see what could work for you. If you don’t teach your kids how to manage money, somebody else will. And that’s not a risk you want to take. Jumpstart your kids’ finance management now and give them an early opportunity to grow financially responsible.
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