Teaching Kids about Money Management
In this post, we are going to discuss how you can teach kids about money management so that they can understand and utilize money in a proper way from an early age.
As a parent, you want to secure the future of your children by providing them all the financial support that they will require and this is why most people find it essential to save money for their kids.
Unfortunately, about 12% of parents do not discuss the importance of saving money with their kids and most parents in the world hardly ever teach anything to kids about money because they think that their children are too young to know about the financial aspect of their lives.
Building Money Mindset
The way we handle money and our overall relationship with wealth greatly depend upon the type of mindset we have built during our childhood by forming beliefs about money based on whatever the society taught us and what we experienced at an early age when it came to knowing about wealth.
A person who has experienced less trouble in getting their needs fulfilled and who has grown up in a family where money was not an issue usually becomes an adult who does not face a lot of financial problems.
On the other hand, one who has seen a lot of financial scarcity in the early childhood often finds it difficult to earn and manage money in their adulthood.
It is not necessary that a person born in a rich family will stay rich for the rest of their life nor a poor person is doomed to remain poor, but one who has seen how people behave while facing financial situations in their childhood ends up forming beliefs that decide their financial blueprint.
As a parent, we teach good manners and moral values to our kids but what most people fail to understand is that it is of foremost importance that we should discuss about money with our kids and teach them about money management when they are young.
How to Teach Kids about Money Management
As we have already discussed that we should make kids familiar with the concept of wealth at an early age. Here we will show you how you can do this based on how old your child is:-
From Age 3-10
One of the most important lessons about earning money is that you should do some work to get the reward and to teach this lesson you can give certain tasks to your kids so that they can get their pocket money for finishing a chore. This can be as simple as putting their toys back in the right place after use.
If you will take your kid for shopping in order to let them know about the price difference of various toys and tell them that buying an expensive toy will require them to save more money then they will understand both the value of different goods as well as the importance of saving money.
This is a fun and playful way of teaching your kids about something that will be very useful in their future life.
From 11-16 Years
This is the right age to take your kid’s knowledge about wealth to the next level. At this age they are capable to make the right decision while buying something, so you can encourage them to do the necessary research and compare various products before spending money on something. This activity is also essential for helping kids to build a healthy self-esteem.
In this age, you can teach your children about managing money by making them distribute their money under different categories viz. for spending, for short-term savings, and for long-term savings. You can also buy piggy banks to explain this to your kids and encourage them to save money.
You can also begin to include your kid while you make your household budget and demonstrate to them how money is distributed.
From 17-21 Years
In this age, a person becomes capable to handle money but still, they are naive in handling their wealth when it comes to dealing with the world, so this is the right age to teach them about banking.
You should be strong enough to not entirely support your kid financially at this age so that they can learn about finance on their own but you can lend money to your kids for their little requirements at a fair interest rate.
Although it may seem a little strange to lend money to your own kid but doing it in a healthy way will prepare them for a lot of future life situations.
Talking about Money with Kids
In the above paragraph, we have seen how you can teach various money-related tasks to your kids but it is also necessary to talk about money with your kids frequently and here we will see how you can do this in various situations. It is very important for you to talk to your kids from an early age so that they listen and understand you well, as they grow up you should be able to discuss worldly matters like finance with them.
You can take your kid to the ATM or bank whenever you are about to withdraw money and tell them about how that place holds the money that you have saved by earning it, otherwise, they will form a belief that it is some magic place from where money can be taken whenever you need. You can also tell them how your saving gets lesser than before when you withdraw money in order to enlighten them about the practicality of financial matters.
This can also be done while shopping by showing them how different varieties of the same product are available at different prices and how to choose from different options at the best price.
While using credit cards and internet banking your children can get confused when they don’t see the physical money and they may find it difficult to process the concept of abstract money, so you should also let them know about this particular thing when they are ready to understand such concepts.
You should frequently let your kid handle money without controlling their decisions and keep an eye on how they are making use of that wealth. This gives you a good opportunity to talk to your kids about their money management skills and encourage them to learn from their experience so that they can avoid their past mistakes from repeating.
It is also good to discuss with your children about various investments and the risks involved in it, you can also encourage them to play investment games using your own creativity.
So these were some methods and tips that you can implement to make your children capable of dealing with money properly. For more information we recommend you to try out the digital product named “Teaching Kids about Money“.
Here’s an interesting video on teaching kids about money management:-
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