Teaching children about money 2022
Teaching children about money
Teaching children about money and financial wellness, is one of the most valuable lessons they can learn, here are some key points that may be helpful:
Make use of a clear piggy bank
Making use of a piggy bank is a good idea but making use of a see through piggy bank is an even better idea, simply because children will be able to track their money in real time, by just taking a glance at the piggy bank. Teach children about the concept of growth, and how big of an accomplishment it is if their piggy bank is starting to fill up, no matter how small, growth is growth.
Money doesn't grow on trees!
To teach a child the meaning behind this common saying, will lay the foundation for an ethical, dedicated financial literate adult. If a child does not learn financial skills at home or at school, it will be difficult for them to understand the value of money and how to manage money matters later in life.
Work towards a bigger goal
Working towards a financial goal will help a child to distinguish between what is realistic and unrealistic, therefore it's important when setting a bigger financial goal, that it is within the child's means, but just slightly out of their comfort zone.
Talk about budgeting
The easiest way to teach a child about budgeting, is to explain the difference between goals, wants and needs. Don't just talk to a child about money, but talk about how to use it wisely, this will be a really helpful lesson that they can use in their lives.
When a child receives money, whether it be as a gift, or part of an allowance, use the opportunity to talk to them about the concept of budgeting. You are not equipping your child for life by buying them whatever they want without explaining the fact that you have to budget for expenses.
Set a real-life example
Children learn best by example, therefore it's a good idea to lead by example. The best way you can set a positive example is by being honest, in terms of finances, don't be afraid to tell children about financial mistakes you made and what solutions you are going to use to solve the problem at hand. Sharing your experiences with money will not only make your experiences more relatable but will help to build confidence in the child.
Saving is important
Learning the importance of living within one's means is one of the most basic financial lessons a child can learn. The sooner a child grasps this concept, the better. A good way for a child to understand this concept, is to set savings goals, with that said, make sure to give recognition to the child once the goal is achieved. Teach children that good things take time, just like savings. The discipline of saving money is a habit that needs time to form.
Consider a form of income
An allowance doesn't only teach kids about finances, but also about responsibility and the consequences of poor financial decisions. Using an allowance can help to motivate children to complete tasks or chores. An example of giving a child a bigger allowance can be by rewarding them for achieving good grades at school.
Involve children in big purchases
Talking comfortably about finances is an important part of helping kids develop a healthy relationship with money, especially when it comes to the decisions and considerations that need to be made with the purchase of big expenses, such as holidays or buying a car. As these money topics come up during the process and children are around, talk about the steps you are taking as openly as you feel comfortable. Include children in as many decisions as possible, from the basics to the more complex decisions.
