3 Things to Keep in Mind When Teaching Your Kids About Money
As a parent, it’s a fundamental responsibility to teach your children the importance of money, which includes how best to save, invest and spend hard-earned cash. It’s integral in your child’s adult life that they understand the significance of money, while also how to be independent and make wise decisions when it’s time for them to leave home.
Without a doubt, personal finance can be complicated. For young and old, making the right choices with money is hard, especially if you’ve not been taught the ropes from a young age. With that in mind, we’ve created an essential guide for those looking to teach their kids the most important aspects of money.
Take a look below at our top three things to keep in mind when teaching your kids about money!
1. Be Inspiring
To start, it’s easy to be negative and pessimistic when teaching your kids about money. It is a major cause for stress and can make you do some rather questionable things after all. Though, when you’re teaching your children about personal finance, it’s time to lead by example and inspire.
We suggest going over all of the incredible ways you can earn money, and what it can do for your kids and your family. Offer up the chance for your kids to make money by creating a few well-paying household chores and be sure to let the kids know all of the great things they could save up for.
It might also be a good idea to encourage your kids to be entrepreneurial. Take the time to set up a small summertime business like a lemonade stand, sausage sizzle or even tutoring online with Cluey. This will teach the kids the worth of the dollar and also how the sale of goods and services works.
2. Encourage Smart Spending
Another incredibly important thing to keep in mind is the cruciality of smart spending. We don’t just mean being wise about wasting money and the value in products either. In the age of impending climate change and environmental degradation, it’s essential to educate the kids on where their money is going and whether it’s contributing to society negatively or positively.
On top of this, be sure to let the kids know about sales, holiday markups and markdowns and be as open as possible about why you’re not buying a smartphone (for example) right before the launch of the next model.
To cap off smart spending, it’s also vital to outline the differences between needs and wants. If your kids are looking to ‘buy’ solely for the sake of it, it might be worth talking with them about why they want a product, whether it will contribute to their life and if it really is worth it.
3. Explain Investments and Long Term Savings
To cap off our list, it’s crucial that you instill an understanding of the future with regards to money for your kids. Children tend to be locked to the ‘here and now’ rather than thinking about their needs and wants down the road.
Of course, kids are going to want to spend cash, gift cards and other monetary rewards instantly; it’s simply how their brains work. However, you should do your best to highlight what might come of a gift if it’s left to sit and gather interest over time.
Opening a savings account for your child is an excellent approach to teaching your kids about saving and how big a saving’s account can become if regular deposits are made and if their financial gifts are placed in an account for the long term, rather than spent right away.
A little tip here is to create visuals as often as possible. If you can show your kids a graph of their savings over the course of a year, there’s a good chance they’ll be on board when it comes to saving rather than spending their allowance and rewards right away.
With all of the above in mind, it’s not hard to explain the basics to the kids when teaching them about money. It’s crucial to be visual, forward-thinking, and explain the importance of their hard-earned money.
It’s essential to keep yourself as positive and encouraging as possible, as we know, kids love to mimic those around them. With a positive attitude toward money, you’re well on the way to fostering a great little saver.