Develop healthy money habits for your kids, and they will learn valuable lessons along the way
There’s no getting around it: kids learn from their parents about money. Think about your own relationship with money before you dispense financial advice. How do you manage your money? Do you have debt? How do you spend your income?
One day, your children will thank you for teaching them the concepts of prioritizing, investing in the future, and living within your means.
Are you unsure where to start? Here are some tips to help you get started.
1. Define Your Values
Everyone spends their money according to their values. Every child has a different personality and preference. What are they interested in saving for?
Offer a savings target and promise to match it to motivate impulse spenders to save.
Make sure your children know that spending just a little of what they have can buy them so much enjoyment. Balance is the key.
2. Let Them Be In Charge
Pocket money is not the most important factor. The idea is to provide a modest sum that can be spent as one wishes.
Talk about saving for something worthwhile and how to do that.
Talk about the choices, but let them decide for themselves. Soon, they’ll realize the value of not wasting money on useless items. Mistakes are learned through hard lessons.
3. Educate Them About The Value of Being Budget-Friendly
Kids love to pretend they have a shop. That’s a great way to teach them about price and affordability.
Provide a tray of different-priced treats and enough money so kids can choose one or two to buy.
By doing so, they will learn to choose wisely. Do you think it’s worth $1 for a cupcake when marshmallows are only 20 cents each? What will you choose?
4. Motivate Kids To Save Money
If your kids decide to save some pocket money, set up a piggy bank or a bank account for them.
Make sure they understand how interest works and keep a record of their savings on a spreadsheet or in a notebook so they can see how their savings increase over time.
Setting aside a little money every month, no matter how small, teaches children how to plan for the future.
5. Make Investing A Part of Kids Lives
In addition to pocket money, you might want to give your teens a small monthly investment allowance. Talk about the state of the economy and the investment options they may be interested in.
Maybe they’ll want to invest in companies that are solving climate change, so they can support a good cause and earn money towards their university education.
Risk and patience go hand in hand; this is a great way for you to discover what you can gain from practicing patience.
6. Develop Opportunities To Earn Income
Children should be assigned age-appropriate chores (like cleaning up the room, feeding the cat, and doing laundry), so they are able to contribute to the household.
Children can earn money by doing chores, such as washing windows, walking the dog, and washing cars, so they will learn that earning money takes time.
It is only after they have worked for it that they will understand the meaning of “money doesn’t grow on trees”.
7. Identify The Difference Between “Need” and “Want”.
Children are surrounded by marketing messages. Children need to learn that they can’t always have everything they want.
It is important to let them know that they have what they need and that the want may arise on their birthday – or they can spend what they have saved.
In most cases, the craze will pass, but if they decide to wait or purchase the item themselves, chances are that it will have a higher value.
8. Encourage Them To Share
Having your child donate one toy or belonging before buying a new one is a good way to teach them the value of “enough”.
The ability to use what you have to help others is a valuable life lesson, even if you don’t have much. Discuss the concept of giving and receiving rather than hoarding.