It’s best to teach children as early as possible about the importance of a dollar. The world would be a greater place if all children appreciated the careful handling of money. Think how many senseless tantrums you could’ve avoided if you’re children new exactly how money works. Below are some money know-how concepts children can understand easily.
Making kids earn their own pocket money is one important lesson; this helps them learn money doesn’t come easily and must be earned. After earning money, they can understand the importance of saving. Thus, parents should create a link between earning and saving. Encourage saving by making your kids save for exactly what they want to buy. Teach them how to set aside earnings daily or weekly, and how long they’ll be saving until they can afford the item. Give them realistic goals and encourage them by offering incentives like topping up or doubling the amount when they stay on track with their goals.
Make a Budget
Children should understand the value of money before handling real money. This can be done by giving them different notes and coins as pocket money to make purchases. Show them your children how to work with a limited amount and make sacrifices when necessary. One way would be to assist your children at the grocery store by providing the exact amount to buy specific items on a list. Children should also learn to deal with the consequences of over spending if they don’t work on a set budget. If they add items you didn’t include on the list, make them put those items back or forfeit other items. Working with limited amounts teaches the child how to set priorities, and s/he’ll learn how to make hard choices in life.
Children should understand the link between work and economic rewards. Teach them about working towards achieving goals. Use the principle of delayed gratification. Hold back potential rewards earned by your children to be received at a later date. Ask your children to appreciate work with or without promise of a reward. Essentially the child should understand the importance of accomplishment and develop a positive attitude towards work. This lesson can teach them about money supply.
Children should understand different purchasing habits. Children should also understand the cost of things, especially when asking you to purchase items as gifts for them. Buying habits should be sensitized to make them understand how to spend wisely and avoid wasting money. Show good judgment and let them see how you compare prices without compromising quality.
Talking to your children about money should be done regularly to sensitize or make them familiar with the subject. Parents should also avoid complaining about money in front of children as they may begin to relate money to stress. Use fun and creative ways to explore finances and budgeting so it doesn’t become a lack-luster topic.
Taking action to ensure your children’s financial successes is important. It’s never too early to start learning about managing a budget, and your children will thank you endlessly when they become working adults.
Written by Dominic Chan, a finance student who enjoys reading, kayaking and learning different languages. He loves to write about his walk through life and the Top 10 Online Bachelors in Finance Degree Programs.