It’s far easier than you might think to teach your children about money and it can be really advantageous in the long run. Continue to read to find out 5 Financial Educative lessons for Children to help you teach them how to develop healthy money habits. Remember that if you don’t teach your kids how to manage money when they are young they might never learn.
Some parents are concerned that teaching their children about money may put them under unnecessary stress. However, if you want your children to be able to manage their money as adults, there is no better moment to start training them than when they are young and carefree.
Why is it important to teach kids about money? How you manage your money highly influences how your children manage theirs as adults in the future.
Children receive their influences from their guardians/parents, building their worldview around the adults they interact with on a daily basis. If you spend your child’s upbringing complaining and openly worrying about money, they are likely to internalise the belief that money is intrinsically troubling and carry that belief into adulthood.
So what financial educative lessons can you teach your children?
1. Pay for chores not just pocket money
Giving your children weekly pocket money is a lovely concept, but most times it doesn’t teach your children the importance of earning money and developing healthy money habits.
Paying kids commission for duties like cleaning their room, helping with meals, or taking out the trash is considerably more educational. This instils the idea that money must be earned rather than given.
2. Teach them about opportunity cost/ opportunity loss.
That’s just another way of telling them: “If you purchase this toy, then you won’t have the money to buy that video game” . Children and young adults should be able to weigh decisions and understand the possible outcomes. Making it easier for them to decide what they want to spend their money on.
3. Avoid impulse buys
“Mum, could you please purchase it?” Children and teenagers understand how to profit from impulse purchases, especially when these purchases are made with someone else’s money.
Instead of giving in, tell your children that they can pay for it with their hard-earned money. However, advise your child to wait and think twice before purchasing anything that is higher than their weekly/monthly pocket money. It’ll probably still be there tomorrow, and they’ll be able to make a rational financial decision the next day.
4. Open a savings account
Sit your child down when they’re old enough and teach them that not all money can be seen or touched.
Show them when you open their brand-new bank account – preferably with some money already in it as a demonstration – and introduce them to online banking.
Explain how interest works and how their money will grow over time, allowing them to buy bigger and better things as they get older, like a car, a house, or even that massive red water gun they saw the kid next door playing with last week.
5. Teach them about emotional and financial literacy
This will educate your children to grow into sympathetic and kind individuals.
Showing kids the impact money can have on someone else’s life will broaden their perspective and understanding of the fundamental financial inequities that certain people face. You can improve their decency, courtesy, and sympathy by changing their perspective on other people’s lives.