How to Raise Money-Savvy Kids
Train your kids how to be mindful about money
Children can already learn how to spend and save their own money if you just teach them the right ways. Money-savvy kids also reflect responsible and independent individuals who are confident even when faced with financial problems. Check out these simple steps to follow, from money talk to actual money handling with your kids.
Start at home
Electricity and water expenses can really add up to the family expense especially when not managed very well. Ask your kids to do “rounds” with you before sleeping- make sure to switch off unused lights, unplug appliances and double-check everything else that’s turned on but not in use. They get to participate in saving, while learning energy conservation.
It’s possible to have fun for free
Home-cooked meals, free-painting or camping out in your backyard sounds like great weekend activity ideas that will not hurt your wallet! Children these days are so used to going to the mall, shopping and watching movies that they think this is the “normal” way of spending weekends. Don’t feel pressured to do this weekly and let them know that there are so many ways to have a relaxing weekend without having to spend a lot!
Engage them in simple budgeting
If your child can already handle money, you can already give his allowance in advance and let him budget his way through the week, buying snacks in school. Or you can give a certain budget for buying Christmas presents and let him do the shopping on his own.
Teach them responsible spending
Let your child make financial mistakes by learning how to differentiate needs versus wants. If your child insists on buying the plastic toy airplane even if you told him a million times that it’s just going to break easily, let him buy it. If the toy breaks, don’t say, “I told you so”. Let him understand this mistake so that he’ll be more conscious on where to spend his money the next time.
Explain the “Spend, Save and Give” system
Some children can start helping with household chores where they get paid for a certain fee. They can start tracking their earnings and make simple spending and saving goals. Ideally, you can suggest that they set aside 1/3 of the money to spend for things they need, 1/3 for things they want such as toys or food and 1/3 to give for people who need it more.
Start sharing stories about money
You can start with how much baon you had back then or how happy you were when you got your first job, what you did with your very first paycheck, how you bought your first car, first house or how you even lost some money from spending too much. These good and bad experiences will let them understand the value of handling money wisely.
You can start the money talk at any age provided that you give practical examples that they will understand. Learning about money management is a continuous process and these tips will help to better equip them to manage their money early on and help them carry it through adulthood.