While providing for your children’s physical needs is one of your responsibilities as a parent, it’s also important to teach them what they need to know to be prepared to become independent adults as they get older.
These elements of parenting often go hand-in-hand, especially when you’re considering how to guide your kids in providing for their own needs in the future. No matter the age of your child, it’s never too early to teach kids about spending and saving money.
According to research, more than half of parents miss opportunities to discuss saving money in general with their children. Also, research has proven that 36% of parents surveyed feel very or extremely reluctant to discuss financial topics with their kids.
What Is Financial Literacy?
Financial literacy refers to the ability to understand and apply different financial skills effectively, including personal financial management, budgeting, and saving. Financial literacy makes individuals become self-sufficient so that financial stability can be accomplished. When a parent understands the importance of paying off debt, creating and sticking to a budget, and managing their available finances,, they can work toward teaching kids about finances. But parents who struggle with financial literacy may not be able to pass on knowledge or good habits to their children, resulting in challenges that span multiple generations.
Start With The Little Tips
When you start talking to kids about spending and saving money, start with basic information. There’s no need to jump right into overwhelming topics that go beyond their ability to understand.
If you have kids younger than seven, you can begin by introducing them to banknotes and coins. Talk about what each banknote and coin is worth and help them learn how to form and add up the amounts. You can also describe how much things they’re familiar with cost so they can start understanding the value of money.
If you use a credit or debit card or Mobile money, talk to your kids when they’re with you at the store. Explain that the card represents money you have in your account and how you can use it to pay for goods and services. Some parents show their kids the receipts for the items they purchased, helping them learn more about the cost of their purchases.
Teach Them The Importance Of Saving
For most kids, money seems to burn a hole in their pockets, and they’re eager to spend as soon as possible. If your children receive cash as a birthday or holiday gift, they might ask you to take them to the store to shop for something new. Kids often associate money with what they can buy and how they can spend it. But it’s essential to teach children about saving and why it’s important now and into the future.
Young children might be unable to grasp the concept of saving money for the future, but when you help instill this habit, it becomes easier to understand. When your children receive money, encourage them to place a portion of the total amount in a piggy bank or another mechanism for saving. You might establish a set amount they’ll save, like a percentage of the total
Teaching your kids to save money benefits them in several ways. Beyond helping them to prepare for the future, learning to save can teach the principles of delayed gratification and discipline, both of which are important as children grow and develop. Understanding how to plan and set goals can also be valuable lessons in a child’s life. You can even teach a motto or mantra for the importance of savings such as “saving is a good habit to start early in life.”
Teach Them How To Make Smart Money Decisions.
If your kids seem to spend money as soon as they get it, sit down with them to discuss how to make smarter financial decisions. When you decide to start giving them an allowance, emphasize that this is the only money they’ll receive. They might struggle with the desire to spend it initially but don’t give in to their demands for more money to buy other items or participate in activities.
When your kids inevitably ask for money, use each situation to remind them about saving and planning for the future. Children don’t always know when a chance to do something fun will come up, but by setting aside some of what they earn, they’ll be ready when the latest toy comes out.