Five lessons on money to teach your kids before they go back to school
Early childhood and teenage years have a significant impact on how we spend our money. Believe it or not, our spending, saving, and investment habits impact our life and influence our kids and their present and future monetary choices. This is why it is crucial to teach your kids the importance of money and give them a practical guide map to follow for the rest of their lives. If your child is between the ages of 5 and 18, you can teach them the following five financial lessons before school reopen after summer break.
Educate them about financial literacy
Establishing a foundation for financial literacy in your children is one of the most important thing you can do for them. Many financial experts suggest that there is not too early an age to start teaching your kids about money, and children as young as five and six can begin learning. Young brains are impressionable like a sponge, and the younger you are, the more you can grasp. Depending on their age, you can choose to educate them in any way you deem fit. For instance, if you have a six- or seven-year-old, you can make them familiar with the concept of money by letting them observe you while making cash payments. If you have a 10 to 12-year-old, you can discuss the importance of money with them.
Teach your kids money saving techniques
Before your kids go back to school, teach them about money-saving techniques. The techniques you help them adopt can be as simple as putting extra pennies in the piggy bank at the end of the day or tracking their spending every week or month. Help them distinguish between their needs and wants/ desires and learn money-saving techniques. For instance, if your kid has an eye on the latest toy or gadget, but already has a functional one, have a conversation with them about saving that money for something better in the future. These money-saving techniques might seem simple but in the long term these lessons will be very helpful for them.
Loop in your kids in financial planning
By looping in your kids in financial planning, doesn’t mean exposing them to complex monetary concepts, such as stock market or tax. If your child is still young, keep it simple at first and introduce them to new topics as they grow. Involve your children in those aspects of financial planning that revolve around their needs. You can, for instance, teach your child to save his pocket money for the trip expenses if he wants to go on a school trip. You can also utilise similar situations to get your children introduced to the processes involved in opening and operating a bank account. Highlight the benefits of putting money in the bank, tell them how their money can grow with the interest earned on their investment.
Give your kids opportunities to earn monetary incentives
This is a very fun way of teaching your kids about finance. Chores can be boring for children, so to make it interesting you can reward your kids with some money once they finish some household tasks. This will bring in a sense of achievement in them and they will also learn to handle cash. Do not make every chore rewardable, and make sure they perform some duties as their way of learning home etiquette and discipline.
Let your kids figure out how to spend and allocate money
Children also learn more by doing than listening and memorising. When you allow your kids to spend their own money, you convey to them that you trust them to take some of their decisions. For instance, if your kid has an upcoming event for which he needs money, ask him if he can make some plans to save some money for it. Teach your children how they can save money—by keeping tabs on their spending, understanding where one should spend and where one can save, or take part in welfare initiatives where they can contribute as children and achieve little monetary rewards. These will be their first steps toward learning how finances operate in the real world.
Teaching your children about finances is not just about sharing your pearls of wisdom. It is also about setting a good example through your own financial decisions, letting your children experiment with the techniques of saving money, and explaining complicated financial topics using real-world instances. It is also crucial to give them clarity on the objective of teaching them the importance money management and one should be open and honest about own financial ideologies while giving valuable financial life lessons to children.
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