Money is the reward we get for our hard work or for our talent and this cost helps us live a better life. We all need to sustain our quality of life and hopefully make it better. All of us need to learn ways of spending or investing money smartly. The parents of today realize this need and are investing their time in giving their kids money lessons. From the start of their lives they are taught skills that will help them be financially independent. It is also important for parents to teach kids about money, so they can avoid making the mistakes their parents did. Research shows that children as young as 3-years-old can learn the basic concepts of spending and saving. So, it is necessary that parents start teaching their children about basic concepts regarding money from an early stage. Following are some of the concepts that you need to teach your kids and the rationale behind them:
Teach them to save
Teaching your kids, the art of saving will help them practice patience. You do this by letting them know that if they want something they need to save money for it. Money lessons at this age will set the tone for a financial savvy nature in the future. You can give your child jars for saving money in and set a rule that whatever allowance they get they can spend 80% of it and 20% can go in the saving jar. With that, your child will use their allowance very wisely. All the money they have saved will make them feel proud of their achievement and when they do plan to spend the money, they will be very mindful of what they spend it on.
How to spend money wisely
It is normal for your kid to want to spend money on everything they like. One way you can help control that is by telling them that once they buy what they buy, it can’t be changed, and they will have to keep that with them. Spending wisely is a very important base for your children to have, this habit will make them think before spending on anything in life, which is a very pertinent trait to have in this age of inflation. Make sure when you teach your kids about money you also enlighten them about banks, loans, debts, interest and credit cards from an early age. Children nowadays think about credit cards as wads of magic, it is very important to teach them about the dark side of credit cards and how you must pay back the money with added interest. You’ll be surprised to know how smart kids are.
Tell your kids about sales and encourage spending in the season by setting an example yourself. If they want clothes for an occasion or a present for friends help them locate sales that will give them the best value for their money. When you have birthdays in the family, make sure you keep a budget for a present, for example birthday presents for siblings can’t be more than $10. This will not only help them get a reasonable gift but also help your spending as well.
How to track spending
A lot of parents these days encourage their kids to maintain journals and write in them every day, in the same way you can encourage your kids to keep a record of how they spend their money. This will not only help them know where they spent their money but also reflect if the choices they made were wise or not. At the end of each month sit down with your kids and discuss with them any money lessons they learnt from their spending. Discuss with them their goals for the upcoming month and the amount they want to save, encourage kids when they are more inclined towards savings because this habit will help cultivate wise spending.
How to invest
After the money saving lesson, you should know how to teach your kids about investing their money. As they grow older and are able to grasp more complex matters, teach them how they can make their money work for them. Discuss with them different investment techniques; for starters you can help them save in another currency. This investment behavior will raise people who understand and actively invest in the stock market. This way you will be teaching your kids to take risks with their money and if they are wise enough, it will play in their favor.
How to earn money
When your children feel like their allowance is not according to their needs, encourage them to work to support themselves. Whatever creative ideas they have of making money, you can advise them. For example, if they want to sell their old toys, help them sell them. If they want to work as gardeners, tutors, newspaper boy/girl encourage them wholeheartedly. You will observe that these kids will be more careful when spending their hard-earned money. When you think of ways of how to teach your kids ways of earning money, make sure you keep avenues open for every kind of idea, this might be a tough step for you as a parent but remember, it’s in your child’s best interest.
If they want to sell their art, help them setup their business profiles, if they want to do something with friends, make sure it’s reasonable but then let them do their thing. You can even ask your neighbors if they need someone to babysit their kids and then tell your kids about that opportunity.
As a parent you must know how to teach your kids about money matters, especially the technical aspect of it. Make sure you teach your kids about money from an early stage because the stronger the foundations, the wiser spenders they will be.
If they learn to save from an early age you will help them be financially independent. Once they have developed the habit of being financially independent, they will not ask you for money.