One of the most important skills your child should develop is the ability to manage finances well. The earlier you teach your child correct values (and practices) about money, the sooner he learns discipline and consistency in spending and saving money.
The future is bright for the person who knows how to plan his finances. He can spend within his capacity and he knows how to set aside funds for unexpected rainy days. But bleak days await those who are careless with their financial resources. One is bound to end up in debt and with no assets to enjoy in later years.
That’s why it’s important to teach young children about money and frugality. Here we explore some useful methods that allow you to teach financial principles even while your children are young.
Talk to Your Kids about Money Matters
The earlier you involve your children in discussions about money and bills, the earlier they will understand the ways of the world.
So, talk to them about the importance of money and inform them about the family’s money situation. In times of need, partner with them in saving money. In times of sufficiency, reward each one’s thriftiness by celebrating as a family.
Let Them Experience the Reward of Hard Work
Teach your children the value of a dollar by letting them work for it. When children work for their toys or rewards, they realize the value of money and the cost of earning it. Call it incentive or reward but do let them do some paid tasks from time to time.
Reward them with allowance money in exchange for house chores that don’t normally fall under their responsibility. This means that you wouldn’t want to give them money for making their bed. But, you may want to reward them for helping you collect, sort, and clean recyclables for refund purposes. Allow them to babysit for people you know or for other relatives. Let them explore ways they can earn money by doing chores for other homes.
Start Them Saving at a Young Age
Guide them in their spending. Don’t let them spend all their gift money. Teach them to set aside a portion of what they have each time they receive money. You can open a bank account for them and let them make the deposits themselves. When children practice money-saving principles, they can grow to have more control over their spending. You can read more from Hip2Save here.
Delay Their Spending
Teach them delayed gratification whenever you can. School supplies and basic personal needs must be spent as the need arises, but train them to delay using the gift cards that they receive during birthdays and holidays. Have them redeem those gift cards during a sale, or when prices are lower on the products they intend to buy. This teaches them self-control and trains them to stretch the value of their money.
Train Them on Practical Ways To Save Money
Train them to be mindful of money saving practices around the house. Now, some parents can resort to scolding tactics. But the more effective way is to rally together, watching and reminding each other to be conscious about the use of electricity, water, and other resources in the home. Thank them every time they remember to turn off the lights. Show them each time the bills reflect a lower charge. Celebrate the savings from time to time by treating the family to something nice.
Train Them on How To Make Better Choices
Don’t be lazy. Don’t just shut their request down with, “No. That’s too expensive.” Don’t just frustrate them with, “You don’t need that.” Instead, show them better choices. “Listen, instead of that, you can buy this, and you can buy another one with the money you’re going to save.” That has more impact. There’s more learning in words like that.
Let Them Experience the Value of a Library Card
With a library card, they can borrow books for free. They can read as much without having to spend money. They can watch DVDs cost-free. They can use textbooks without having to buy them. A library card is a simple yet effective way you can open their minds to taking advantage of available freebies.
Get Them into Recycling And Reselling
Rally your children towards recycling items. It exposes them to ways they can help save the planet. It also gives them a quick way to earn money. Let them do the collecting, sorting, and redeeming at the refund point.
Teach your kids to care for their books, toys, clothes, and shoes. Hold a garage sale later or sell those items online. Let your children see firsthand that they could make money from those items. This also trains them to care for their stuff and to see them as investments.
Kids can learn the value of frugality early on in life. Teach them these methods and lead by example.