28 April 2019

How to Teach Kids About Money

Every parent wants their kids to be among the smart spenders of their generation. No surprise if you have already settled for the best savings account for baby as a starter, most parents will do anything to secure their kids’ future. But where does a parent really start teaching their kids about money? For one, teaching kids anything is daunting. It is a process that requires tons of patience and understanding, and it is in no way a short journey. But don’t fret, parents, with the right approach and the proper mindset, you can help your kids become money smart.

A few studies have pointed out that as early as 7 years old, kids start to form their money habits. This is the same time they imbibe what they see from you, so better watch out. There are a few practical tips you can use if you want to start teaching kids about money.

1. Educate them about money. You can begin by introducing coins to your kids and explaining to them its value and encouraging them to put together what they have in a big clear jar or a piggy bank. When they see the jar filling up with all the money they chose to put in there instead of spending, they get a stronger sense of motivation from what they see.

2. Practice what you preach. If your actions contradict what you tell your kids, then you are not going anywhere. Children follow after what they see, not what you tell them. In a grocery store, show them that you only buy the necessities. In terms of impulse buys, set an example of how waiting for a few days to see if you still want it will culminate a sense of discipline among them.

3. Give them fixed allowance. Enforcing a fixed allowance policy will teach your children basic budgeting on their own. When they know that this amount is as much as they can get from you, then they will have to become wiser in spending especially if they don’t want to end up with zero balance. You can even download a simple monthly budget template to help them form a financial map of sorts for the year. Just make sure that you stand firm by the amount you set and that you don’t easily give in when they beg you for a purchase.  

4. Let them make extra money. While giving your kids allowance is a good move to teaching them the basics of budgeting, it would also benefit them if you introduce them to the concept of earning money. This way, they are likely to value more what money they have since they worked to earn it. You can give them extra chores here and there and reward them with a reasonable pay. This will fuel up their creativity that they would think about other ways they can earn extra money.

5. Teach them how to save for a goal. If your kids want to buy something they cannot afford, do not turn down their spirits too quickly by telling them they cannot have it. Instead, teach them how to save for it. Create a timeline and a few options on how by putting aside certain amount of money, they will be able to purchase it on varying timelines. The more they save, the sooner they can get it. The smaller money they set aside, the longer they will have the money for it. Creating these scenarios will give them a better picture of how to responsibly manage their finances.

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