Every parent wants their child to grow up happy, fulfilled, and successful. This means teaching them to make good decisions for their future. As a parent, your role is to impart principles that will be their basis for how they go about life.
Financial literacy is not just for adults! By understanding the importance of saving money and handling it well, your kids will become better equipped to make good financial decisions later on.
By laying down the basic building blocks for finances, you will have an easier time teaching them about the bigger concepts when they are older. Financially literate kids can more readily grasp good debt-their education, business ventures, and future home mortgages. They will also be prepared to make wise investments as adults.
Allow Them to Handle Money
The best way to teach your children how to use money wisely is to let them use their own. These opportunities allow them to see how money works in real-life situations. Here are small, practical ways you can let them handle finances.
Let them keep their allowances
Children’s money habits are established by the time they are seven years old. They will follow whatever they have seen in practice for their earliest years, so you must teach your kids to use money as soon as possible.
Set allowances for your kids per day or week and observe how they make decisions. This allows them to experience the responsibilities of managing money on their own. It also gives kids their first experience of having the freedom to save up for things they want.
Guide them and give them tips on how to best use their money. Since your kids are new to it, they will take some time to get the hang of it.
Open a bank account for them
Filling up a piggy bank is every child’s first experience with saving money. Take this even further by opening their first savings account. Many banks allow children to open their own accounts as joint holders alongside a parent.
Check the fees, interest rates, and account terms. These considerations can maximize yield for when your child becomes an adult.
Teach your children about its future benefits and the how-tos of depositing. More than allowances, regularly depositing in a savings account and seeing their money grow will teach them about financial responsibility and its rewards.
Give them commissions for accomplished chores
As they grow older, your kids should also begin to understand work and its benefits. When they finish their daily chores, give them commissions. These can be simple tasks such as washing dishes, taking out the trash, or making their bed.
This practice allows your kids to understand that money is something you work for. There is a healthy balance required in this, however. You want to teach your kids the value of working without undermining the importance of freely offering help when it is needed.
Be a Good Financial Role Model
It isn’t all about what you teach your kids. What you model to them also leaves a lasting impression on their financial habits. There are a couple of important things to note while you teach your kids good money management.
Don’t be an impulse buyer
This isn’t easy! All of us feel that urge to immediately buy something we like at the moment. Fun as it is to buy what you want, as a parent, you are responsible for showing your kids a good example.
Teach your kids to think about their potential purchases before making them. Make sure to practice this, too, with your spending decisions. You can avoid impulse buys that you may regret later by taking at least a couple of days or even a couple of weeks to consider if you really want the item you’re eyeing.
While it is essential not to be reckless with finances, it is also important to instill the importance of giving to your children. Financial literacy should not be all about how your kids can earn well and amass wealth. It should come hand in hand with good values.
Be an example of generosity, and your kids will learn to do the same. Don’t be stingy with your resources and share them with others. You can also discuss how you and your kids can pool money to donate to charities or support causes.
When you raise your kids to be financially literate, they should also learn to have giving hearts. Wise financial decisions and generous gestures will guide your kids to the path of success.