One of the top goals as parents should be to teach our kids how to manage their money. Unfortunately, financial literacy is a talent that, when developed, may give your children a huge advantage, but when neglected, can put them at a disadvantage that is challenging to overcome.
The best ways to raise kids who are financially responsible depend on their age, but why not get a head start?
Consider the advice we provide below:
Discuss finances with your kids
While I personally don’t support subjecting children to adult stress (they will have plenty of opportunity for that later! ), I do believe it is a good idea to talk to our children about how we set our monthly budget.
We have more opportunities to teach our children about the cost of life as we talk to them about topics like preparing for retirement and paying our bills before we spend our income on non-essentials.
When our children show an interest in family expenses, we provide them with non-emotional answers. Before kids are old enough to even grasp it, we don’t want children to learn to be anxious or afraid of money. However, we stress that:
- We pay the bills first, including our savings because we consider it to be a bill.
- Then we purchase groceries because our grocery budgets can change according to our available funds.
- Then, since fun activities don’t actually have to cost anything, we may utilize the remaining funds for extras like enjoying ourselves.
Although it is highly simplified, our children can actually understand this discourse. You must save money at the top if you want money to be left at the bottom. And that the security it may give you and the people around you is what gives money its “worth.” not in the amount of items you can accumulate.
I take great care to never give our children the burden of managing our household finances. But if I approach our family budget with confidence and serenity, I hope that it will educate our children how to handle money in the future.
Please read: Poor Financial Management by Filipinos
Teach children the value of one peso
Even young children can understand that they have a certain amount they are allowed to spend and that different things have specific prices. This could serve as your first budgeting lesson. Give your kids some money to spend on a thing (or things) of their choosing.
They will swiftly determine whether they can afford what they want now or if they need to save up more money in order to buy it. Getting children to buy into this “game” can be mostly accomplished by empowering them.
Options.
List a few possibilities for what your child can buy for, say, ₱500 to keep with the empowerment concept (for instance, one expensive thing or a number of less expensive items to sum up to , ₱500).
Then permit them to decide. Making their own decisions gives them a boost of freedom and pleasure. We can only hope that they will wish to keep pushing themselves with these financial choices in the future.
Describe the banking industry
Take your youngster on a field trip to the bank, and when they’re a little older, create a savings account in their name. Use this chance to educate them on the financial system and how they can benefit from it going forward.
Have your youngster open a bank account with a debit card if and when they start working. Only until they’ve demonstrated that they are financially responsible adults or soon-to-be adults can you consider having a conversation about getting a credit card.
The idea of a credit score is well-explained in this passage.
Boost a budding entrepreneur
Generation after generation, youngsters have enjoyed running lemonade booths as a fun summer hobby. Encourage your child, whether they want to offer lemonade or high fives (once COVID is under control, of course).
This will instill a strong sense of work ethic in them as they grow older and teach them about supply and demand (or a bruised ego that can be nursed back to health and learned from).
Then, promote employment as soon as you can. Starting with a summer job is a terrific idea. The best learning comes from experience.
Bring up the stock market with them
When you give it some thought, the stock market concept is actually rather entertaining. Give your kids the freedom to choose a few stocks they want to buy. Although it is unlikely that these stocks will be anything other than Disney or Apple (depending on your children’s ages), it is still possible to monitor stock performance thanks to modern technologies.
The stock market can teach investors significant lessons in both patience for long-term goals and quick gratification.
As we all know, there are many people who are financially irresponsible, and sadly, a large portion of this is due to lack of exposure to information and opportunities when they were young. Create a solid foundation for your children so that, hopefully, as they develop into contributing members of society, their connection with money will remain positive.
Tolerate compromise
The ability to compromise and negotiate is one that is useful throughout one’s life. Allow your kids to bargain with you (for example, chores in exchange for toys) or create presentations to try to persuade you of their point of view.
So let them be imaginative.
Conclusion
We all want our loved ones to know they can be content and self-sufficient while leading stress-free lives as they grow up. This doesn’t have to remain a wish; we’re here to assist in making it so.
Teaching your children and grandchildren how to create and plan for their own futures is one of the greatest gifts you can give them. By doing this, you aid in their development of self-worth, good judgment, self-discipline, and self-care.
The first and most important step toward financial wellness is developing a well-thought-out plan that may then be carried out.
