It’s important to teach your children good financial habits from an early age. Understanding the value of money is crucial to shaping your child’s way of thinking when it comes to spending and saving, and can play a vital role when dealing with finances in adulthood.
What should I teach about money?
Rather than trying to explain abstract concepts of saving and growing money to young children, make sure that the lessons that you’re teaching them are age-appropriate, making sense to their own financial experiences.
For example, teaching your children how to save up their pocket money for an expensive toy that they like is a good place to start. This allows them to be more self-disciplined and patient with what they can and can’t afford.
Alternatively, you can speak to your older children about the benefits of improving their credit score. This will enable them to be more conscious of their money, as having a good credit score will help them to achieve those bigger financial goals later on in life.
Be a good role model
Children mimic the behaviours and actions that they see, so try your best to present positive financial attitudes when they are around. Avoid talking too much about financial stress or burden around your children at a young age, as this could foster a negative attitude or a fear of money.
You could implement some positive financial habits into family life, such as using cash in front of them instead of a credit card to show that money has limits – when it’s gone, it’s gone.
Additionally, make sure to give your child their weekly or monthly pocket money on time. If you don’t do this, it could signal that you don’t always have to be on time with financial commitments.
Encourage saving by setting goals
If you give your children pocket money, a good idea is to encourage them to save some for a rainy day, or to build towards buying that new toy or gadget they’ve always wanted.
Take time to explain how their money doesn’t have to be spent all at once and go through the benefits of growing their savings. Your child will be excited about purchasing their first big item, especially as they’ve earned the money themselves from doing chores around the house.
Involve them in decisions
Giving your children real hands-on experiences with money can help it to make more sense to them, as they can see the money being spent and dealt with in real-life situations.
For example, taking them food shopping or explaining bills will reveal to them how much things cost and how money needs to be budgeted accordingly in order to afford these items.