Money is a vital resource for everyday living, and teaching your children good financial habits will be something they can use for the rest of their lives.
That said, talking to kids about money can be difficult, especially when it comes to subjects like savings and budgeting. They may have just started learning about adding and multiplying, and here you are throwing around real-world applications around these concepts!
It can most definitely be a test of patience, but with the right strategies, you can make teaching your kids about money an easy, relevant, and worthy experience.
Here are five quick tips to help you broach the subject of money with your kids in an age-appropriate way.
1) Lead by example
The best way to teach your child about money is to lead by example. This notion is supported by the social learning theory of renowned psychologist Albert Bandura.
In his theory, he stated that people learn from observing others around them and imitating their behaviour. This is especially reinforced when the observer sees that the person they are imitating is being rewarded for their behaviour.
So if you want your child to be financially responsible, start by exhibiting financially positive traits in your own life. When you tell them to save a penny, show them that you’re also saving by budgeting your money. If you’re shopping for groceries with your kids, exercise restraint and don’t overindulge in buying things you don’t need.
By modelling these habits for your kids, they’re more likely to adopt them in their everyday lives over time. Children undergo a rapid acceleration of cognitive development during their early years, so it’s important to take advantage of this crucial period to instil good habits.
2) Provide payment opportunities
We don’t want our children to feel like they’re owed money for doing simple household chores that they have to do in the first place. But if they want to get a feeling of what it’s like to earn and save money, offer them paid opportunities for going above and beyond their household duties.
For instance, if you own a small business like a brick-and-mortar store, you can delegate some responsibility to your kids and pay them for their time and effort. If you don’t have a business, you can still give your kids small paid opportunities, like mowing the lawn or dog walking for the neighbours.
Giving your kids paid opportunities allows them to learn to value their time and the importance of a dollar. They’ll also get first-hand experience in handling money, which will come in handy when they start to earn a regular allowance.
3) Teach them to save
As the provider of the household, it’s critical to educate your children about saving their allowance.
You can start a savings account in their name and help them deposit their allowance into it every week. This will allow them to see their savings grow over time, and it will give them a sense of financial security – even if they don’t fully understand the concept yet.Â
A more proactive approach is to give them a piggy bank or a mason jar to encourage them to save up for a specific goal. When they’ve saved enough money, you can help them purchase their favourite toy, teaching them the result of delayed gratification.
If you want to learn more, this article about savings habits for kids is a great resource to help you instil good habits in your children from a young age.
4) Stop them from buying impulsively
Many parents fold when it comes to their kids nagging them to buy the latest toy or gadget. But this only reinforces the idea that they can get whatever they want if they just say so, which can be detrimental to their future financial habits.
Instead of giving in to their demands, you have to be firm and stop them from buying things on impulse.
A good way to do this is to make them wait for a week before buying the item they want. This way, you can determine whether the item is truly desirable or if it’ll just lead to buyer’s remorse.
You can also remind them that the money they’re using likely isn’t even theirs in the first place! If they’re adamant about buying the item, you can give them an allowance or some chores to do to earn money.
5) Encourage charitable acts
Developing a healthy relationship with money doesn’t only entail knowing how to save and spend it wisely. It also means knowing how to share it with those who are less fortunate.
You can start by teaching your kids the importance of charity and volunteering. You can also set an example by donating to a worthy cause or giving your time to a legitimate charitable organization.
As your children get older, you can encourage them to get involved in philanthropic activities, like organizing a food or clothing drive in their school. This will instil in them the importance of giving back to the community, and it will help them develop a more well-rounded perspective of money.
Takeaway
Teaching your child about money is an important step in helping them develop good financial habits.
By following the tips above, you can instil in them the importance of saving, spending wisely, and giving back to the community.
