Parents are the living example from whom kids learn many things; then why not money management. However, one should ensure transparency and clarity in their instructions. If you are struggling to explain the importance of money to your child, this article should at least help you get started.
Here are some pointers that would help parents teach money management to their kids:
- Involve the children when making household purchases
However, good parenting includes letting the child learn on their own even if they stumble at first. Send them on buying trips with a little extra money so that they can calculate the exact change they should get back. Show them how you set aside funds for monthly bills and other expenses.
Moreover, as gut-wrenching as it sounds, parents should have the ability to say no to their children if they are being careless with money. Tough love is very important when it comes to inculcating financial discipline.
These practices will give your child a general idea of the concept of finance and money management.
- Show them how planning and saving work hand in hand
Start with installing some learning material and some money management applications on the phone; these apps can help the child keep a track over their allowances as well as use the technology efficiently. When given a monthly or a weekly allowance, the kids can determine their spending habits and prioritize their needs and wants.
Accordingly, if your child wants something worth $30, and his/her allowance is only $15 a month, then ask him/her to keep aside $5 every month until the money grows to be $30. This method will teach them saving as well as budgeting.
Also, many parenting coaches advise giving money to kids only when they complete an assigned task on time. This way, the child understands that money is to be earned.
- Open a bank account in their name
- Give them an add-on card
However, if you are giving your child a credit card, make sure that they understand that the amount spent is to be paid back with interest.
- Teach them about personal finance early on
Making kids recognize the importance of money and its management is an essential part of parenting. To reiterate, learning to manage finances from a young age will not only inculcate discipline but will also ensure that the child goes on to lead a comfortable life.