Being a father of four I appreciate the value of raising money smart kids. Please welcome today Ruby Andrew as she shares with us some important steps parents should be taking with their children.
Financial values and good spending habits are one of the important life skills parents can teach their children. These lessons have a great effect in shaping the financial life aspect of a child.
Indeed, it is imperative for parents to begin teaching their children these financial lessons at an early stage. Here are seven lessons that should be a must for any parent to teach.
Start talking early enough about money
It is really important for a child to understand more about money. What money can buy, where one gets money and how one spends money.
Explain to the child that one has to work to get money and show things that cost money. For example, show that the clothes he or she has, the things in the house and even the house itself cost money.
In addition, make the child understand that how one spends money is crucial. Spending money can lead either to wastage or valuable spending. Test whether the child has understood these concepts by giving the child a certain amount of money on a regular interval and then track the expenditure pattern. Do not be afraid to consider corrective actions where necessary until the child implements these concepts as expected.
Do not bail a child when they fail to meet a savings target
If a child has planned to save for something and then fails to raise the money at the expected time, do not come in as a parent and fill the deficit.
Instead, realize it’s fine to let the child to feel the pain of not meeting targets and leave him or her to raise the remaining amount. This will inculcate the culture of savings to a child and also responsible spending.
Be a role model as a parent
A child will only take these financial lessons seriously if the parent is practicing the same. Show savings structure, spending habits and how a balance is achieved between competing wants. Moreover, show the child how a budget is prepared and how to stick to it. These will motivate the child and will desire to do the same thing as the parent.
Help the child to be disciplined on debt issues
Inform the child on issues relating to debt such as why and when to take debt. Show the child how it is better to take development debt rather than consumption debt. A development debt is debt which pays itself back such as a loan to grow a business while on the other hand a consumption debt is one which the person taking the debt pays with their own money (ex. a car loan).
Teach a child how to get value for his or her money
Getting value for one’s money is important especially when purchasing items. Show the child how to compare prices for a product and pick the most favorable price and in addition how to choose quality products. Make the child to always research on offers on products provided by different sellers. There are so many platforms to conduct research on products such as magazines, newspapers, television adverts and the Internet.
Teach the child how to negotiate
Teach the child on the importance of possessing negotiation skills. Help the child know how to negotiate things to his or her own favor. Let the child know the process of haggling and to always engage negotiations in a win-win approach.
Open a bank account for the child
It is important for a child to understand how transactions are done and how bank operates. However, a parent should closely monitor how the child spends money in the account in order to avoid misuse of money.
Editor’s Note: These skills are so critical for kids to learn. The earlier you begin implementing these strategies in their lives the better they will be with money. I cannot agree more that being an example is the #1 tool you could use to foster their growth. Teach…model…encourage…and help in any way possible. You won’t regret it and they will be thankful to you later in life.
Questions: Did your parents teach you about money? If not, how did you learn? Parents, what’s the biggest struggle you have in teaching your kids about money?
Ruby Andrew lives in Bristol, UK and is an ardent peruser and blogger. Since her early years she’s had an energy for composing. Her articles have been distributed in driving UK daily papers. Her interests include nourishment, audits (Book/Movie), Travel, Fashion, and Lifestyle. She fills in as a visitor blogger in her areas of expertise and right now composes in the interest of CSA contact.
Next Post: This One Thing You Lack to Have Treasure in Heaven
Prior Post: Not So Obvious Steps If You Want a New Job
I remember when I was a child, I had a bank account. As a matter of fact, I saved enough to cover my birthday expenses. I believe opening the topic about money should start the moment they ask about the value of money. This is really a delicate topic so we’d better be careful.
We don’t have kids yet, but I really like, “Do not bail a child when they fail to meet a savings target” and “Teach the child how to negotiate.” I wish my parents would have taught me how to negotiate. It’s such an important skill (Jacob has GREAT negotiating skills) and I wish mine were learned earlier.
I love the ideas of not bailing kids out and teaching them to negotiate. Some other good ideas are helping them sort their money into three jars labeled give, save, and spend. Then they learn to understand these three purposes for money.
I think the most important one there is not bailing them out when they don’t meet their goals. It only teaches them that they can do the same thing the next time they don’t want to save for something.
My parents did not teach me about money; however, I have an 8 year old son, and I talk to him about money all the time. We started when he was about 5, and we have seen a lot of progress since we began. We have had a few situations where we let him “fail” in his financial goals, and it’s tough as a parent to sit back and watch it; however, he always learns so much from those situations and we think it’s better to fail when the ramifications are smaller versus watching him fail later in life when the ramifications are much larger.
Great advice here, Brian. One thing we’ve done with our oldest is allowed her to borrow money at one point, for the sake of teaching her how much debt is a type of bondage. Not sure if it would work with every kid, but she hated owing someone so much that she’s resolved to stay free of debt forever.