If you want your kids to be great money managers, you should start preparing them when they are still young. While most parents love to reward their children with gifts like money, they tend to forget teaching them on how to manage it.
According to a report by the University of California, kids begin to understand the basic concepts about money at the age of three. And by the age of seven, they will have already developed their money habits. That’s why you should teach your kids about money management.
Source: Lhyzie Bongon
Contents
How to Teach Your Kids about Money Management
If you’ve never taught your kid about financial management, it’s not too late to do that. In this article, we explore the best tips that can help your children manage their cash better.
1. Introduce the Basic Concepts of Money in their Lives
When your kids are young, you need to introduce a coin to them by teaching them how it works. Explain to your child that they can use the money to buy things. It is at this point you can start encouraging them to save the coins if they don’t plan to purchase anything.
You can buy your child a piggy bank or jar where they can save the coins. The containers should be transparent for the kid to see how their money grows. You can also explain to them how their money grows, the amount they had before and after saving.
When going to shop, your child should accompany you to see how you compare the prices of items and pay for them. Tell the kid that shopping is one of your monthly expenses.
2. Be an Example to Your Child
When it comes to financial management, remember that you are your child’s model. Know that your child watches every financial step you make, including how you pay bills. If you are using plastic money every time you shop, they will notice and eventually copy that.
When you go shopping with your child, write a shopping list, and include all the items you plan to purchase. When in a supermarket, avoid things like impulse buying and explain to them why it’s not good to buy things not included in the list.
3. Teach Your Child about Budgeting
If you organize a family event like a trip, involve your child in budgeting. They will see and learn how to budget. In the subsequent events, allow the child to plan and budget on your behalf, but with proper guidance. That will help them develop financial planning skills.
As you teach the child about financial budgeting, explain to them that it’s crucial to budget for the essential things first. Advise them that they should always opt for affordable products and services, but not at the expense of quality.
Source: National Geographic
4. Let Them Understand That Money is Earned
It is no surprise that most parents would always give free money to their children. While it’s not wrong to do that, you should always let your child know that they should work to earn their keep. You can achieve that by paying them a commission for the chores at home.
Some of the chores your child can do include cleaning their rooms, collecting trash, and mowing the grass. If you give your kid a commission after completing a particular task, they will grow knowing that one must work to earn money.
5. Consider the Frequency of Giving Your Child Allowances
If you must give your child some money to cater to their needs, consider the frequency at which you do that. It is wiser to give out cash after every month rather than a week.
Understanding that they have to wait for one month to get money, your child will learn how to manage the amount they have. That will also teach them about contentment.
Source: Familias
Final Words
It is no doubt that teaching your kids about financial management can be quite tricky, and it might take longer than expected. However, what the kid will learn about money will be worth the time you spent. They will know how to manage their cash when they are adults.
According to glassdoor.ca as you teach your child to save money for future use, set an excellent example by saving for their future education through RESPs. Customers’ feedback like Heritage RESP Reviews can help you understand the reputation of an RESP company.
