Our educational system does not teach us about investing, saving, making money, or even managing our finances in general. Your primary concern as parents is for your child’s well-being. Of course, this does not necessarily entail that you’d give your children the finest clothing, the most up-to-date toys, or the most innovative technologies.
Instead, it simply means that you want to teach them how to fish rather than giving them the fish. You’d like to make sure they secure their future and that no matter what happens, they’d be protected and succeed, especially when it comes to money matters. Moreover, you would want to provide a foundation on which they may build to achieve success in their lives.
The Perfect Timing
The truth is, there is no better time to start. There’s no such thing as too early nor too late. Consider it this way: encouraging your children to be more financially responsible at an early age is a way of learning about impulse control. Moreover, it has the potential to yield significant benefits in the long run. Educating youngsters about saving, investing, and spending their money as millionaires do, would help them develop excellent habits that will make achieving financial independence more realistic as they grow older.
The Fundamentals for Children
In terms of financial learning, the sooner you initiate it as part of your child’s development, the better. Studies have shown that children’s financial behaviors and mindsets are developed by the age of 7; thus, starting as early as possible is ideal.
When your children are old enough to realize that they should not be putting coins in their mouth, you may begin introducing them to higher amounts of money and even banknotes. Explain the concept of money and how it is utilized, demonstrating to kids how cash functions are more helpful than telling them about it. For example, allow them to observe you paying with cash or cards as you check out your groceries and explaining how that system works in the simplest way they can understand.
However, note that it should not stop there.
Inculcating Saving Habits in your Children
Your children’s first encounters with money will almost certainly involve spending it as they see where and how you use it, such as making purchases. Therefore, it is crucial to show children that the purpose of money is not simply for buying; they should also learn proper ways to save it.
Saving money is not only a necessary financial habit, but it is also a life skill. It promotes patience, self-control, making goals, planning, and emphasizing the need to be prepared. This habit also increases one’s sense of stability and freedom. First, assist your children in developing a saving practice by providing them with piggy banks or saving jars in which they may deposit pennies or notes. Then use brief, straightforward messages to motivate your children, such as “a penny saved, is a penny earned.”
However, with young children, you may have more opportunities to educate them on saving enough using short-term objectives. For example, a gift they truly desire or some treats and candies. Allowing children to create simple and highly attainable goals can help them understand the importance of delayed gratification. It will also serve as their stepping stone in making and achieving long-term goals later on.
What about money-making opportunities?
The best way to learn things doesn’t limit to books or preaches. At some point, children would also need to have their own money to understand how to manage it responsibly. Allowances can help you achieve that goal. For instance, it would be best if you consider asking your children to perform some house chores or duties before they can get their allowance.
People appreciate money differently when they understand the hard work put through into earning it. Even if they are required to contribute to the household as family members, some duties are performed by the children without compensation. However, if you want them to work for it, they must do specific age-appropriate chores first. Examples are cleaning their game rooms, fixing their toys every time they finish playing, assisting in transporting your family pets to the vet, and retrieving them from their sessions with a puppy trainer.
To instill healthy saving and spending practices in your children, you must first demonstrate it yourself. In a nutshell, you need to walk the talk and be consistent about it. Learning about money management with your children is a journey and a process that may take a lot of effort and time. However, if you exert the necessary purpose and consistently express a loud and clear message about finances, you will build healthy habits in your offspring that will serve them quite well in the future.