How to Teach Children About Money
If you want your kids to be fiscally responsible adults someday, you need to start them young. But this may be tricky because, for one, the concept of money can be too complex for children to understand. For another, you may feel as though you’re not knowledgeable enough to dispense financial literacy tips to your kids. But while speaking to them about money may seem taboo, you will want to bring up the topic early on to steer them in the right direction. You don’t want them to become part of the alarming statistic that 44% of Americans are having trouble coming up with $400 for emergency expenses when they grow up.
Shying away from talking to your children about money can be a huge mistake. To help them develop healthy money habits, this needs to start at home. Here are some tips that can help you instill financial literacy in your children so they can enjoy long-term success.
Give them an allowance
One concrete thing you can do to gauge your children’s responsibility with money is to give them an allowance. First and foremost, it’s essential to lay out the rationale behind an allowance with your child. Frame it as something that they should earn to instill early on that money is not freely handed to them. You can tie the money to chores to expose your kids to the feeling of working for something, as this teaches them the value of money and how it is earned. The amount is entirely subjective, and you’re free to do this on a monthly or weekly basis and change the amount depending on the chore you assign to them.
Encourage them to save up on want they want
We previously noted how important it is to teach your kids patience. You will want to help them become more patient and save money by encouraging them to squirrel away funds for the things they want. This will teach them delayed gratification, and that not everything can be handed to them when they want it. You can start by agreeing on an end goal and paying them a certain amount of allowance so that they can choose to either spend or save for their intended purpose.
Show them a real bill
Another excellent way of teaching your kids financial literacy is by showing them a real bill, such as your electricity or internet bill. You can then impose a challenge and ask them to see if you can work together for a certain period to cut back the bill from the previous month/s. Ask them to make more effort in doing simple things like turning the lights or television off when not in use. You may be surprised that there will be anticipation for when your next bill comes in, as they will expect their efforts to have paid off. Whether it did or didn’t it’s also worth showing them how money owned can easily decrease if you are careful and increase if you are not.
Pretend to invest in something
When your kids are a bit older, ideally when they’re in their teens, it may be worth letting them learn about the stock market. A good trick would be to pretend to invest in companies they are familiar with like Nintendo or Apple. You can even turn it into a family activity by having each member select a stock. You can also read the paper or dissect financial news together to discuss how the stock values of everyone’s choices have changed. It may seem like too much, but the earlier they learn the better their understanding will be later in life. Just remember to keep things very simple.
Teaching your children about money isn’t easy, but if you are proactive and get them involved you can impart good useful lessons that they will take with them as they grow up.
Specially written for Woombie.com
By: Reem Jorja