The more active you are in teaching your children about money, the easier it will be for them to become financially responsible as they grow up and enter adulthood.
Here are some easy ways to teach financially responsible habits to your kids.
Introduce Your Children to the Concept of Money as Soon as They’re Old Enough to Understand
Once your children are old enough to understand money, you should introduce them to coins and notes and explain how money is used. The earlier you explain the concept of money, the easier it will be to teach them financially responsible habits as they grow older.
In addition to explaining money and familiarizing your kids with cash, actively show them how money works.
For example, when doing your grocery shop, take your children with you and talk through each of your money-related actions, such as telling them that you have chosen one brand over another because it is cheaper and talking through the process of handing over money, receiving change, and checking the change at the checkout.
As your children grow older, you can also explain about debit cards and credit cards. You can also demonstrate how you create a budget for your monthly outgoings based on your income.
Teach Your Kids About Saving
Saving money is an integral part of financial responsibility. So, once you begin giving your kids an allowance, talk to them about the importance of saving.
While young kids’ interactions with cash will primarily be about spending it, it’s still vital that you teach your children from a young age that money isn’t only for spending. It should be saved as well.
Give your children piggy banks or savings jars that are used for putting money aside for saving up for something special, such as a toy. Saving for short-term goals will be the prime motivation for young kids. As your children grow older, they will better understand the value of long-term saving.
Provide Your Children with Opportunities to Earn Money
It’s important to give your children an allowance so that they can learn to make decisions about their own money, such as saving it and spending it. But it’s also beneficial to provide your children with opportunities to earn their own money.
Children are much more likely to be careful with their spending and saving when they’re using money that they have earned rather than money that they have been given.
And as they grow older, they will better understand financial responsibility. So, give your kids money in return for doing chores around the home.
Help Your Children to Budget
As your kids grow older, you can assist them in budgeting their money. Show them how to track how much money they have coming in and how much they are spending, and how adjustments to budgets can help them to save more.
They will then be much better prepared for budgeting their income when they’re ready to enter the real world.
Teach Your Kids About Other Financial Matters
When your kids are in their late teens, you can talk to them about more specific financial matters, such as credit cards, investments, overdrafts, and loans.
You should explain how such things work and demonstrate how important it is that they compare different banks, credit card providers, lenders, and so on, in order to find the best deals and rates of interest. For example, you could show them how to get a low rate personal loan online.
Summing Up
The key to helping your kids become financially responsible is to take an active approach and start the learning journey at a young age.
So, to recap, you should:
- Introduce Your Children to the Concept of Money as Soon as They’re Old Enough to Understand.
- Instill a Habit of Saving in Your Kids.
- Provide Your Children with Opportunities to Earn Money.
- Help Your Children to Budget.
- Teach Your Kids About Other Financial Matters.
