Do you know what’s the number one parenting mistake?
Avoiding talking about money with kids…
To give you a perspective – while growing up, your kids only see you “spending” money. When you don’t talk about finances openly, they aren’t introduced to important concepts like “savings” and “investment,” – which makes all the difference.
But what if we told you that experts believe introducing kids to finances as early as 3 years old could help them become financially literate?
Not only does it set them up for financial success in the future, but also teaches them valuable life skills such as decision-making and responsibility.
So get ready to equip your little ones with the tools and lessons they need to become financially savvy individuals…
5 Important Money Lessons for Kids
1. Money requires discipline
Are you guilty of telling your kids that you can’t afford the soccer classes during summer and then taking them on a lavish beach holiday? Sending such mixed signals can be confusing for your children.
Leading by example is critical when teaching your kids about money. If you want your children to develop healthy financial habits, you need to model those habits yourself. This means being mindful of your spending habits, setting financial goals, and making responsible decisions.
In the example above, it is important, to be honest with your kids about your financial situation and help them understand the value of budgeting and saving. You may have booked your flight tickets and hotel reservations two months in advance and even saved more using credit card points. Such an explanation can help your kids understand financial decisions that require planning and discipline.
2. Budgeting makes you smarter
Experts suggest that teaching children comparison shopping can be introduced as early as six years old. It’s an excellent method to teach them the skills of setting a value and making an informed decision.
One simple way to teach comparison shopping to your child is by involving them during your grocery shopping trips. Ask your child to read the price labels and compare the size of different products. Encourage them to calculate the amount percentage. Ensure you talk to them about different qualities and variants available for a particular product.
For example, one week, buy a box of branded, organic kitchen towels, and the next week, settle for mass-produced kitchen towels that you usually get in BOGO deals. Then, discuss the differences and decide if the brand name is worth the extra cost.
By teaching your child comparison shopping, you’re helping them become financially responsible adults who can manage their money wisely.
3. Impulsive purchase is your worst enemy
“Dad, let’s upgrade to PS5. It’s finally out” – how would you respond to that statement as a parent? In most cases, if you’re a father who loves gadgets as much as your son, you’d be equally excited for the upgrade.
Before you go all in, stop and think of this as an opportunity to teach your child about responsible spending.
Firstly, it’s crucial to recognize that upgrades of any sort can be expensive and it’s not always practical or affordable. Instead, you can teach your child the importance of budgeting and saving for such purchases. You can also help them understand that delayed gratification is a vital skill.
And if they still insist on impulsive purchases, ask them to set a goal and earn the money for it. This will also help them appreciate the purchase more, knowing they’ve worked hard to earn it.
4. Money needs to be earned
Talking about earning money, we all understand that it is hard work. But your kids may not know that unless they get their hands dirty in the mud. By the time your child is a teenager, they may start to feel the need to have their own money to spend on their interests. This is a great opportunity for you as a parent to help them learn how to make money.
You can start by brainstorming ideas together for ways they can earn money. Encourage them to think creatively and consider their interests and skills.
For example, if they enjoy drawing or painting, they could offer to create artwork for friends and family in exchange for payment. Or, if they enjoy baking, they could offer to make treats for neighbors or sell them at a local farmers’ market.
5. Savings will be your friend for life
And it all starts with handing them some hard cash and a passbook to their savings account. Motivate your child to deposit a portion of their allowance or earnings from a part-time job into the account and teach them how to track their expenses and manage their balance.
This experience will help them learn about bank fees, interest rates, and the consequences of overdrafts. Additionally, it will also help them to develop a sense of ownership and responsibility over their finances.
In conclusion, teaching kids about money management is an essential life skill that will benefit them in the long run. By following the five money lessons outlined in this article, parents can play a crucial role in shaping their children’s thinking and values about money.
But if nothing seems to work, you can sit down with your child and watch the movie “Confessions of a Shopaholic” together. Although this may seem like a light-hearted suggestion, the movie portrays the consequences of reckless spending and the importance of financial responsibility. Well, I learned most of my money lessons from this movie. Ciao..:)
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