As parents, there are a number of important values and life lessons you might wish to pass down to your children. While qualities such as kindness, patience and empathy are focused on, an essential life skill such as money management is often ignored. Which is why a lot of us have to learn the value of money management the hard way, through trial and error and sometimes, even grave mistakes.
Therefore, to pass down your legacy of hard-earned financial wisdom to the next generation, it is vital to start teaching money management for kids as early on in their life as possible. But how do you get started?
Here are a few basic smart tips to keep in mind when planning to teach money management to your children:
- Lead By Example:
We cannot teach another what we do not know ourselves. Which is why the first step towards teaching money management for kids is to work towards becoming a good money manager yourself. Keep in mind that children often learn by observing the attitudes and repeating the behaviours of the adults around them. particularly parents. So make sure that when it comes to money management, you serve as a good role model for your children.
- Play Money-Based Games:
Children learn best when they are taught with a splash of fun thrown right in. There are a number of board and card games that can help you in your money management lessons for your children. Games like Monopoly, Game of Life and Business can be fun ways to introduce kids to simple as well as advanced financial concepts. They also help children understand how to handle, save and transact with physical and even digital currency.
- Teach Them the Value of Saving:
Parents can often be found instructing their children to save money but don’t spend much time elaborating how or why saving money matters. That is why the importance of money management for kids should be inculcated early on in their development.
It is crucial that they understand the negative consequences of not saving money and the benefits of saving something for a rainy day. This can be approached by using examples that they do understand, such as their favourite food or toys. You can even start with the humble piggy bank and eventually progress to a trip down to the local bank and introducing them to savings accounts.
- Give Your Children an Allowance:
It is a common misconception that handing money over to your young children might lead to ‘spoiling’ or ‘indulging’ them. However, the truth is quite the opposite. When specified as an occasional amount of money with a fixed limit, allowances can help children learn to value the freedom as well as consequences of their spending choices.
- Help Them Develop a Concept of Income:
In addition to the small allowance, you can also give your children the opportunities to participate and carry out chores for a little extra money. Firstly, this helps them build money management skills by developing an idea of ‘income’ and being rewarded for their hard work. Secondly, it teaches them the monetary value of the ‘invisible labour’ that is done by their non-working parents and helps them appreciate the value of housework.
- Involve Them in Financial Decisions:
Be it a discussion of monthly budget, or planning expenses for the future, make sure to include your children in small financial decisions. Even if they cannot contribute, they can and will willingly participate and most importantly, learn from such discussions. Keep in mind that children are sponges for information and early experiences with money management can teach them much more than they might learn in classrooms.
- Teach Kids the Value of Donating and Sharing:
Not all of us have the same financial privileges, and this can be a vital lesson to teach when you approach money management for kids. Encouraging your children to share a portion of their money with the less fortunate sections of society can be a critical lesson in not just finance, but also empathy.
Now that you have a fair understanding of these tips, you can form a clearer roadmap in your journey towards imparting money management lessons to your children. Having said that, remember that the first step towards teaching money management to your kids starts with you.
One of the first steps towards being an ideal money managing role model is to align yourself with the right bank for all your transactions and financial needs.
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