It’s normal for parents to steer clear from discussing finances with their children. We might think that the topic is too burdensome for them or that their young minds aren’t able to comprehend complex concepts yet. However, a 2017 survey revealed that 64 percent of parents who talk to their kids about money at least once a week have better chances of raising children who are responsible in handling savings, credit cards, and mortgages later on in their lives. Here are some simple tips you can try.
Reinforce the “Waiting Pays off” Lesson
When we continually surrender to our children’s immediate demands, they are more likely to become frustrated if things don’t go their way. It’s crucial for kids to know that if they want to purchase something, they should wait and save first. Delaying gratification not only teaches hard work and patience but also lessens the possibility of kids depending on credit cards or other “buy now, pay later” schemes in the future.
Use Transparent Jars to Save Money
While we’ve all used piggy banks as children, clear jars are more motivational because kids are able to see how their money is growing. Consider having three jars for Saving, Sharing, and Spending and educate your child about the function of each jar. Encourage them to put 10 percent in the Sharing jar and split their remaining money between the two other jars.
Show Them That Money Doesn’t Grow on Trees
For kids to understand the value of money, explain how cash is earned and why it’s important to have a budget. To do this, help your child set a goal. For instance, your son wants a new toy car. Tell him that if he decides to buy the car, he might not have enough money to buy a new video game. If he agrees, let him get the $5 from his Spend jar and accompany him to the store where he physically pays for the purchase. Consistently doing this will train your child to weigh decisions at an early age.
Reminder: Make sure that the goal is realistic in terms of price tag. If it’s too expensive, you can introduce a matching program where you’ll say, “Save X amount in two months and I’ll double it.”
Be a Walking, Breathing Example
Does your child often see you making impulse purchases or using your credit card? As per a University of Cambridge study, children form money habits by the time they reach 7 years old. To set a meaningful example, let your child assist you in making small budgets. You can simply ask, “We have a $10 budget for this weekend’s stroll at the park. Where do you think should we spend it?”
Being an independent business owner can also help to set an example for your kids. Companies like Amway allow you to make money while building skills – all valuable financial lessons for your child. Pave an encouraging path for your kids and they are bound to follow.
Offer Chores-Based Commissions
It’s okay if you don’t want to give your child regular allowances, but permitting them to manage their own money will train them in making informed decisions. Offer to pay commissions whenever they do chores such as picking up their toys or taking out the trash. Post a big chart on your kitchen wall to keep them inspired.
Emphasize the Importance of Giving
Remind your kids that not everyone can afford basic commodities and that they are in the position to help. Now that they know the purpose of the Sharing jar, help them select a charity or even a person they know who needs assistance. Apart from giving money, you may likewise consider placing an empty box in your home. Instruct your kids to fill the box with stuff that they don’t use anymore. At the end of the year, accompany them to a church or an orphanage where they can share their gifts.
Make Learning Fun
Playing Monopoly is a fun method to learn about key financial concepts, particularly managing cash flow. If your child is too young for the board game, you can set up a pretend store instead. Fill the makeshift store with toys, give your toddler a certain amount, and let him or her shop.
Remember that it’s never too early to start because what you instill in your children now can make an invaluable difference in their adulthood.