How to Teach Your Children About Money
Financial literacy is one of the most important things in life. Unfortunately, schools don’t make it a priority to teach children about money.
This means it’s up to you as a parent or guardian to teach your children these essential lessons, and the education should ideally start from as early as three years old.
Here are some tips to help you implement these lessons:
1. Show, Don’t Tell
Children have very short attention spans, and they will usually not be interested in what you have to say. A great way to give them the right lessons about money is to manage your own money correctly.
From an early age, your children will notice your domestic arguments about money and any silly purchases you make, and they will proceed to emulate your actions. So, always ask yourself whether you are setting the right example for your kids.
2. Teach Them the Value of Money
If you grew up in a well-off home, you probably thought money magically appeared. Most kids don’t understand that money is earned through hard work, and an excellent way to teach them the value of money is to give them financial rewards for small tasks.
Teaching them the opportunity cost theory will also help them appreciate the value of every coin. Just mention to them occasionally that if they choose to eat at a restaurant, they will have to forgo the cinema.
3. Teach Them How to Set Financial Goals
Children who learn how to set financial goals early in life are likely to stick with this habit forever. If they are very young, you can encourage them to save for a toy or a video game.
Bigger goals should always be broken down into smaller and more manageable ones as the child might get overwhelmed.
Most adults today don’t know how to save and manage their own money, and that is chiefly because they did not learn about money from their parents or school.
There are a lot of adults who misuse credit and get themselves into trouble because there is nothing wrong with taking out a personal loan for something you would like or need, if you can afford the payments and it doesn’t put you under any financial pressure.
To spread the payments of a large buy over a number of months makes financial sense in the right circumstances
You can save your children from this problem by giving them simple financial lessons from an early age. Follow the tips listed above to teach essential money lessons in your kids successfully.