Raising financially savvy children is something that can have long term benefits. Not only will your child be able to make money-smart moves when they are older, but it can also help them avoid making mistakes that can see them accumulating unnecessary debt.
You can start them off early with these handy tips.
Lead by example
Children are great at mirroring the good examples you set and also the bad ones. You can start by showing them good money habits that become fully formed by the time they are 7 years old. Even if you already have children that are well into their teens, there is still the opportunity to instil smart money habits. It will also present an opportunity for you to clean up your money habits that have been tripping you up.
Teach them how to save
The beauty of children is that they live in the now, but constantly living for the present also has its drawbacks. Teaching them how to save from a young age can help them appreciate the value of delayed gratification.
You can achieve this by having a savings jar in which you agree to a certain percentage of their allowance that you will put away. You can also help them save towards a new item that they have their eyes set on, so they can understand the value of waiting. It can also help them understand the difference between needs and want which can come in handy in their adulthood.
Involve them in the budgeting process
Making your child understand the purpose and benefits of a budget can be beneficial for everyone. Not only will it help your child understand that before you spend, you need to know where your money is going, but it can also help you separate needs from wants. However, not many parents are comfortable in revealing their finances to their children.
The benefits of creating a budget with your child being present and involving them can help them grasp that there is money that comes in that needs to be split wisely. It can also help them understand why you have to delay buying them a new bike, sneakers, or a phone because they see what the money is being used for.
You have probably heard the phrase 'Money doesn't grow on trees' from your parents, a teacher, or probably uttered the phrase yourself at some stage. Teaching your child that money is earned can help them understand the value of money in their later years when they start working. Paying them to carry out their chores can also let them think outside of the box of creating opportunities on earning more money.
Curb impulse purchases
Breaking out of the habit of impulse purchases is something many people struggle with, especially when you are travelling with children. It is important to show them the effects of impulse purchases by having them pay for it by using their commission or pocket money.
The art of giving away
Giving can sometimes be difficult for children but instilling this by asking them to share a portion of their finances to a charity of their choice or helping other people who are less fortunate than them will help them be more grateful for what they have.