Money and how to handle it shouldn’t be something that’s left for kids to figure out when they begin working.
On the contrary, beginning an early education regarding this matter will help them gain the knowledge and insight needed to handle money.
As a result, they will be able to better juggle their budgets and be able to live comfortably within their means. So we have broken down the age groups where the should be taught about the various facets of money:
- Good long-term goals: Studies have shown the children who are more interested in long-term goals rather than short-term gratification tend to taste more success in life. Drilling this concept home right from their very childhood is important. This can be done with the help of simple games like Simon Says. Over time this will give them the foundation that will help them understand complex topics related to compound interest and investing later on in life.
- Desire vs Need: Along with the above topic, another thing which kids need to slowly learn about is desire vs need. What one desires isn’t always what one needs. For example, kids might desire a robot car but they need is a house, clothes, daily food, and nurturing love. Kids don’t grasp this distinction soon so they need to be taught about it.
- Charity: Note that making them understand concepts of long-term goals and desire vs need is important. But in this financial information, parents shouldn’t forget to teach their children about charity and caring for others. At such a small age, the charity can begin with sharing you or helping with small tasks. If you are going to donate or volunteer somewhere then make sure that they know what it is about. These decisions will help instill a sense of community and empathy in the child for their whole life.
- Importance of earning: Many parents try to shield their children from the entire concept of earning money at an early age. But the reality is that in some way or other children are earning various things at this age itself. For example, children sometimes have to do chores to get more time watching TV. This concept can be taken a bit further so that they understand actual financial transactions. Giving them a weekly allowance in exchange for them performing mundane tasks at home like dusting, cleaning, and such will help them financially later in life.
- Saving up: Learning to save money is an example of long-term gratification. If taught well then it will be very beneficial for kids in the long run. It will help them learn useful financial habits that will help them later in life. To do this open your kid a bank account. Now encourage and help them deposit money periodically. Since they don’t have much to spend on during this age so they will be able to quickly save up.
- Learning about inclusion: Slowly start including your kids in your financial decision. This will help teach them about the monetary value in real life. Not to mention that they will learn about budgeting better. For example, when you are out grocery shopping, talk to them about branded and generic items and why you have to pay more for one. The goal isn’t to buy the less expensive option, but to ensure that they can make a rational financial decision according to their needs. You can even get them a spendsafe card and encourage them to start budgeting and spend.
- Set financial goals: If you have opened that bank account before then it’s time you talk about financial short and long-term goals. You don’t have to begin with complex topics of retirement. Instead, begin with something they will relate to. For example, talk to them about why spending on too many clothes now might prevent them from getting a car. It must be said that kids at this age and beginning from this age tend to do what they want. After all, they have little impulse control at this age. So you can get them a spendsafe cardand monitor their transactions as well as limit what they spend. They might not like this limitation now, but it will teach them about impulse control and how they won’t get everything they want.
- Begin working: Note that as your child will grow older and more independent, a weekly allowance will not meet their needs. This is the right time to encourage them to get a part-time job. Having a real job will let them learn about commitments and how to strike a balance between work-studies-life. But having a job will not automatically and quickly teach them about budgeting. Instead, having a job well probably makes them spend more since they will have some sorry for an income now. This is where you will have to step in and monitor their spending habits through a spendsafe card. You will also be able to restrict their spending with this card.
- Knowing about debt: Every person gets a credit rating with their social insurance number. While no one is quite sure how this credit rating works but one thing is for sure, debt, credit history, credit mix, and more factors play an important role. It is this credit rating that determines the ability and rate of borrowing money. So having a low score will make certainly not make it easy to get a loan or mortgage. As such kids must learn about this soon. Teach them.about good and bad debt. Good debt like housing and education is an investment, while bad ones like bills and credit cards have should be cleared as soon as possible.
The sooner you will begin teaching them about financial responsibility as a whole, the sooner they will learn how to manage money. Having great budgeting and money management skills is underrated but it’s an essential survival skill that will help them live a good life with financial stability.