Teaching children the fundamentals of financial literacy need not be difficult. Even if you don’t have a professional background in finance, it can be easy to guide your kids through the basics of money, budgeting and saving. Allow me to draw on my experiences and share the following few simple tips on how to raise money-savvy kids.
Set a budget.
Giving kids an allowance will help them learn to handle money by themselves. This can be a good opportunity for you to teach them about short- and long-term saving as well as the importance of good spending habits.
If your kids ever ask you for a loan, it’s best to say no. Be a bit stricter when it comes to their allowance so they’ll learn to make the best of what they have and make smarter decisions. Of course, you shouldn’t shy away from teaching them when and how to borrow and lend money. Tell them about your own experiences and impart valuable lessons from when you took out a loan from a responsible lender or lent money to a friend or relative in their time of need.
Talk to them.
Kids can be an inquisitive bunch. When something as intriguing as the subject of money piques their interest, they will be quick to ask questions. And when they do, it’s best to introduce the subject casually. Don’t downplay the importance of money by not responding to their curiosity. Every now and then, work money into everyday conversations. Children must learn at an early age that while it’s important to be careful with finances, it’s not something that should be scary or inaccessible. Instead, make sure your children know that handling money in a smart and frugal way is essential to a successful and happy life.
Let them decide.
Allow your kids to make their own financial decisions. Their spending habits don’t necessarily have to match your preferences. While you can tell them not to buy certain items, you should let them spend their savings on something they really want. If they end up regretting the purchase, they’ll surely learn a valuable lesson about planning and budgeting.
It’s also a great idea to involve kids in household shopping. Preparing the grocery list and deciding which coupons to use can be an exciting learning experience for them. Taking them to your weekly supermarket runs will teach about the importance of planning, saving and finding the best value for their money. When they’re older, bring them to the bank so you can show them how banks work. Encourage them to ask questions.
Be a good role model.
Teach by example. Kids are more likely to do what you do than do what you say. Your actions should reflect a healthy understanding of good money management. If you show them how committed you are to budgeting, planning, and saving, they will follow suit. Eventually, when they’re older, you can be more transparent about your family’s finances.