Kiddipedia
Money management is an important life skill that can greatly benefit children if they learn it from a young age. As parents, it’s our responsibility to teach our children about financial responsibility and help them develop good money habits for their future.
1) Start small but start early – it’s never too soon to introduce your children to the concept of money and budgeting. Even at a young age, children can understand basic concepts like exchanging money for goods or services. Introducing them to the idea of saving and spending wisely early on will set a strong foundation for their financial literacy. Also, it will be easier for them to grasp more complex financial concepts as they get older.
2) Make learning about money fun by playing games like ‘store’ or ‘bank’ with pretend money, and gradually introduce real-life situations as they grow older. This will not only make learning about money enjoyable but also help children understand practical applications of managing their finances.
3) Encourage saving by setting up a piggy bank or savings account for your child and explaining the importance of saving for future goals. This will teach them to delay gratification and save money instead of impulsively spending it. It’s also a good idea to involve them in creating a savings goal, such as buying a toy they want or saving for a family vacation.
4) Teach the value of delayed gratification and the difference between wants and needs. When a child understands the difference between what they want and what they need, they are more likely to make responsible spending decisions. This also helps them develop self-control and patience, which are crucial for successful money management. But you have to start by setting a good example. Children often mimic their parent’s behaviour, so it’s important to practice delayed gratification and responsible spending habits ourselves.
5) Involve your children in budgeting decisions and explain to them the reasoning behind certain financial choices. This will help them understand the value of money and develop critical thinking skills. For example, let them participate in grocery shopping and show them how you compare prices to get the best deal. This will also teach them to be mindful of their spending habits and make informed decisions.
6) Teach your child about the importance of giving. As they learn to manage their own money, it’s crucial to instil in them the value of giving back. This could be through donating a portion of their allowance or volunteering their time for a cause they care about. By teaching children about generosity and empathy, we are shaping them into responsible and compassionate individuals.
7) Be open and honest about your family’s financial situation. It’s important to have age-appropriate conversations with children about money, including explaining the household budget and any financial challenges you may be facing. This will help them understand the importance of budgeting and making responsible financial decisions.
However, it’s also important to avoid burdening children with financial worries or anxieties that may be beyond their understanding. Be mindful of what information you share and focus on teaching them positive money habits.
Here are some additional tips for raising financially responsible kids:
• Encourage them to earn their own money by doing chores or taking on a part-time job once they are old enough.
• Teach them about the concept of credit and explain the importance of paying bills on time.
• Talk about the differences between cash, debit, and credit cards and how each one works.
• Help your child set financial goals and make a plan to achieve them.
• Avoid giving in to every material want of your child, as it can lead to a sense of entitlement and poor money management skills.
Most of the parents focus on teaching their children about academics, sports and other extracurricular activities. Schools also don’t usually include financial education in their curriculum. As a result, many young adults struggle with managing finances and often fall into debt.
The easiest way to start teaching children about money management is by involving them in everyday situations and making it a part of their learning experience. By instilling good money habits early on, we are setting our children up for a financially secure future.
Dana Ronald
President of Tax Crisis Institute
Website: https://www.taxcrisisinstitute.com/
