How many people do you know who do not use their money wisely? Too many. Unfortunately, the majority of these people are students and even young working adults. Most of the money misuses happen due to the lack of knowledge. Now, we all know that money can be a sensitive topic and can easily become boring, but it is crucial to invest time to teach money lessons to your kids.
5 money lessons to get you started
#1 Take it to the bank
Start by opening a bank account for your kids. Using an account like a savings account will teach them responsibility to own up to their money. This is a structured way to teach valuable lessons about money without saying too much.
Encourage kids to actually put money in the bank.
- Have a money jar and reward them for it
- Make them a wishlist so they can regularly see why and for what they are saving
- Teach them that their money grows. When a certain milestone has been reached within their savings, reward them with a form of “interest” and show them that their money can grow if they prove to be disciplined
#3 Money doesn’t grow on trees
It is important to teach them that money has value and that you have what you’ve earned.
- Tie money to chores
- Money should be talked about in the house as a privilege, not a necessity
- Reward kids for well-earned manners
Teaching them a lesson to value money will encourage budgeting all on its own. The best way to teach kids how to manage their money is to actually give them some.
#4 Needs over wants
Kids will be kids and will always want everything, which is why money lessons extend to the point of prioritising as well. Needs are things you use every day and cannot go without. Whereas wants are things mainly bought for pleasure and entertainment. Talk about needs to be met before satisfying the wants.
Kids need to be exposed to credit and the possible dangers it may entail.
- Teach them what exactly credit is and what it means to have credit
- With credit comes responsibility
- What happens if you decide to miss a payment?
- What case study can you exercise in the house to show them the power of interest?
Set up a family savings goal: Encourage the whole family to participate in a savings plan to go on a family trip. Create a stir around the trip and show them pictures of the destination and fun activities to do there.
Enlist your child as a personal assistant: When buying groceries appoint them in an activity to hunt for bargains and find the best deals. This way they will find value in products and services to benefit the whole family.
Visit the bank: These days, visiting the bank can be quite the excursion for a child (and quite the frustration for a parent). Even though this is very tiring, showing your child that money is important to buy things and handle responsibly will empower them. Always remember, kids learn by actions, not words.
This story first appeared on FinCheck and has been reproduced with permission of the author