Teaching your kids about money is an important life lesson that will benefit them in the long run. However, it can be a challenging task for parents to find the right approach. Children are often not interested in financial topics and may not understand the value of money. Therefore, it is essential to make learning about money fun and interactive.
In this article, we will discuss ten effective ways to teach your kids about money. From setting up a budget to playing money games, these tips will help your kids develop healthy financial habits that will serve them well in the future.
Do your bill paying as the kids watch.
Although you may not always see the desired results when applying the "monkey see, monkey do" principle to your children, it is true that youngsters tend to mimic the behaviors they observe. Exhibit both the paper and digital methods you use to settle your bills. Get credibility by having them verify your calculations or those of your remarks. They'll pick up on the fundamentals of the payment procedure and realize its significance enough to incorporate it into their routine.
Let's get real about necessities versus wants.
Wanting isn't inherently bad, but necessities are more important. Start by asking your children to develop a list of their basic requirements, and then another one of their wants. Collaborate with them as they rank the importance of their respective lists. Talk about why each item is given a certain priority and how to meet their goals. To obtain an item on a child's wish list, teaching them to save is one option.
Take out the sale papers and coupons.
Your youngster can learn about corporate competition and get the greatest deals by checking through sales ads, coupons, and unit pricing labels. Bring him with you to the store and have him keep track of the totals as you rack up the purchases. Financial restraint should be emphasized.
Provide an allowance, and then take a cut.
An allowance is a great tool for giving kids some control over spending and letting them make some simple money mistakes. Even so, in real life, people can’t keep everything they earn. Charge your child tax on the allowance you give so he learns about withholding, the government tax system and what taxes support.
Encourage saving and provide matching funds
Having a nest egg, emergency savings, and the ability to avoid going into debt all depend on being able to retire comfortably. Allowance should be doled out in tiny increments so that your youngster can start setting aside money for savings right away. Employer or government matching, such as with pension plans or Individual Retirement Accounts (IRAs), encourages children to save by providing an additional incentive not to spend all their money at once.
Play money up.
Truth be told. No child wishes to always take life so seriously. Yet, games can also be used to demonstrate important ideas and principles. To teach kids about money in a fun way, you can play store with them, have them make their own Playdoh currency, or put on a puppet show about the subject.
Extend some credit.
Few people in the modern world can afford to treat credit like stale cheese. Young people often fail to grasp financial problems because they fail to see that credit is not interest-free cash. Give your kid a loan with interest when they desire something more expensive than they can afford out of pocket instead of making them save up for it over and over again. They will learn the ins and outs of dealing with real creditors and how to responsibly acquire debt through this experience.
Put your children in charge of checking your spending.
When a strategy for spending money falls through, it's usually because its creators didn't follow through. Include your kid on a regular basis in the family's financial planning. Get her opinion on your calculations and how you could better use the money you've saved. Help them maintain track of their income and expenses by making it their responsibility to keep track of receipts.
Strictly enforce the "I'll sleep on it" policy.
Impulse spending is one of the biggest problems people have with money; it consistently throws off well-planned budgets. Have your child wait at least 24 hours before she makes her purchase. This will teach her not to be swayed immediately by marketing and emotional response, and it will lower instances of buyer’s remorse.
In most cases, children learn about the value of labor and the need to earn a living by observing their parents' daily routines. A very distinct view is that money can actually do something useful for them. Saver's bonds are a great way to ease people into the world of investing, and then you can move on to more difficult options like equities. Even if you keep everything on paper and your child never actually loses any cash, the experience of even a small financial setback may have a profound effect.