It is important that you educate your children about money. It is crucial that they learn on time how to manage money.
The thing is that if you do not put in effort in teaching kids about money then someone else will teach them how to manage money and that is not the outcome that you pray for.
We will teach you how to give your children ahead in the manner that you wish your parents did for you and give them the responsibility of handling and managing money at any age. We will help you come up with a working plan on teaching kids about money.
You should consider the following if you want to teach your children how to manage money.
Use A Clear Jar To Save
Using a piggy bank to save money has always been a thing but it has one disadvantage which is that the children do not see the money inside and this does not help in teaching kids about money. They do not have a visual. Using a clear jar helps them see and know when the money is growing. It is an encouragement and it also challenges them to save some more. One day they have a dollar and in a week they want to save more than that. Making them understand how much of a big deal they are doing it can be very helpful. So if you have been worried about how to help kids save money, there is your answer.
Set An Example
According to research at Cambridge University, children begin to form money habits by the time they are already seven years old, so it is important to teach kids about money from early on. They are watching you spend every day and they are forming habits. They will notice when you are being wasteful when it comes to managing resources at home and begin to pick it up as a money habit.
When they get older they will most probably replicate the things that you are doing with your spouse. So it is best you set an example that you want them to follow when they grow up.
Show Them That Stuff Costs Money
Teach them the value of things. Buying and handing them gifts may not really teach them that things cost money but when you make them take money from their jar and pay for something they want you will be teaching them a valuable lesson about the value of things that they own. It is a lesson that will resonate with them for a long time.
Show Opportunity Cost
Opportunity cost is another word for the scale of preference. It means teaching your children that when they choose to spend their money on something they won’t have money to spend on other things. For example, buying a toy or video game will mean that they won’t have money to buy shoes or clothes. This would teach kids about money and also teach them the importance of their decisions and the weight it carries.
Give Commissions, Not Allowances
Handing your children money for just existing is not the ideal thing to do. It is better to reward them for the work or chores that they are doing. You can pay them a commission for cleaning the house, taking out the trash, and other helpful things that they do. They begin to understand that you have to earn money. They learn that money is not just handed to them.
Avoid Impulse Buys
Do not always give in to every buying request that they make. Children always want something, they always think they need everything that they see and it comes with their age group. You can avoid impulse buying to teach the children that they must not purchase everything that they see. You will teach them to use their commission that you have paid them to purchase what they want. You will also have to teach them patience in making money decisions.
Stress The Importance Of Giving
Teach your children from the moment they start making some money to learn to give. They can choose from a lot of places where they can give to people. It could be a church, a mosque, or even a person who does not have so much. They should learn to give and not just receive.
Teach Them Contentment
Social media is not making it any easy for teenagers especially as they spend most of their time looking at their screens. They begin to compare what they have seen online to what is their reality. They want to have the things that other people that they have seen on social media have and for this reason, teaching teens about money has become too important.
You should let them know that what they have may not be as flashy as what is on social media but it still serves them. You can spoil them a little after giving them this important life lesson.
Get Them Saving For College
Teach them to contribute to their college education. Your teenager probably works summer jobs so you can help them keep a part of it ahead for college. This will make them more responsible as they will be happy they did something meaningful for their future. Getting an education is cool and all but there must be financial education for the kids as well.
Teach Them To Stay Away From Student Loans
You will need to have an important conversation with your children where you teach them that they should steer clear of student loans as it is not the best option for their education. They can begin to consider other options like applying for scholarships, they could work while they study and they could even consider going to a community college.
The earlier you have this conversation with your teenager the better it prepares them for the decision ahead.
Teach Them The Danger Of Credit Cards
If you don’t teach your children how bad debts can be then they will fall into the pit of credit cards. Once your child is an older teenager, they will be offered a lot of credit card options and if there is no foundation laid from early on they will become victims of the credit card debts. Teaching the difference between credit unions and banks is also key for helping your kids in their teen years.
Get Them On A Simple Budget
Teach your children how to get on simple budgets. They need to have a plan for their money regardless of their amount. They need to know that without a plan they will make a lot of mistakes. It is important that they make a habit of making money plans.
Introduce Them To The Magic Of Compound Interest
It sounds like an impossible task of getting your children to know about investments. It is best that you introduce them early on to investments when they are younger. Introduce your children to compound interest when they are still young and they will reap the benefits later on in their life.
Help Them Figure Out How To Make Money
Your teenager probably does not have so much to do considering that they spend most of their time playing then you can channel all of their energy into helping them get a job so that they can make money. Teenagers always want money and it would be ideal if they could make some for themselves. They can even go as far as owning a business and making profits.
If you have been practicing most or any of the things we have mentioned above then you will be preparing them for more serious responsibility that comes with money management. From managing simple decisions they will learn how to manage more complex situations involving money in the future.