If you want your little ones to grow up with a good grasp on money handling, educate them on financial literacy as early as now. Research reveals that kids develop money habits at the age of seven, so you must begin schooling them about spending and saving at around this age.
To help you out, we rounded up five ways you can slowly acquaint them with the concept of money management to your children:
Introduce the Concept of Earning
If you want to teach your kids about the value of money, you must first teach them the importance of hard work. Assign tasks to your kids and compensate them for their rendered work. Give them chores such as fixing their bed, cleaning up the driveway, vacuuming the carpet, setting up the table, or taking out the garbage. Once they’ve accomplished their responsibilities, then you can give them their allowance. You have to teach them how to earn money and not just ask for it. This is a good training ground for children. They don’t only learn about responsibility, but they also learn about hard work. Aside from that, they will eventually develop the trait of being resourceful when they grow up. Perhaps they would want to dabble in jobs such as video production, insta graphic printing, or other creative pursuits so they can make a living.
Spell Out the Difference
Educate your kids about the difference between needs and wants. For someone to be good at money management, they have to know the thin line between the two. Explain to your kids that money should first be allocated for necessities such as food, home, and clothing. Tell them that their wants only come in second. They have to have a clear distinction of what’s important and what’s optional, so they know how to make smart financial choices when they grow up.
Give Them a Nudge
Encourage your children to save money. Since you can’t hand them an ATM right away, you can give them a piggy bank to practice the habit of saving. To make it more effective, make use of transparent containers, so they can watch their money grow. Being able to track their savings will motivate them to continue what they’re doing. You can also offer incentives to help your kids take the process of saving money seriously. If they reach a certain mark, you can reward them with money to add to their pool. You can also use this technique when they want to buy something—say, a dollhouse or a new bike. Instead of directly asking you for money, make them save up for it. They will be more inspired to set aside money, knowing they will use it for something they want. One way or another, the habit of saving also teaches kids the value of patience. They are forced to wait before they get their hands on what they want, which is an important skill kids should learn.
Refrain from giving in to their every request. When you take kids to the mall, they tend to want to get their mitts on almost every single thing within their field of vision. If they start asking you to buy too many items, learn how to say no. Even when they beg or throw a fit inside the department store, you have to stick to your guns. You have to teach your kids how to control their urges. If you don’t want them to grow up making bad financial decisions, you have to know how to nip it in the bud. More so, when you overindulge your children, they tend to become spoiled. So don’t let them get used to getting everything they want.
Make Them Choose
Make them aware of the consequences of their financial choices. If they choose to spend their money on toys, you have to help them understand they won’t have enough cash to purchase shoes. Many children do not understand the “losses” incurred when they give in to their impulses, so you have to let them know the setbacks of their decision. When you educate them about the opportunity costs, you train them on making choices on their own. You force them to analyze the situation and come up with a logical decision. Indeed, this is a simple way to teach your kids about financial literacy.
Of course, when teaching your children about the concept of saving and spending, you also have to practice what you preach. You have to set a good example for your kids, so they will be inspired to do the same thing.
Financial literacy is an important life skill that your kids should develop as young as they are. By teaching them how to make smart choices, you prepare them for more challenging financial decisions in the future.