Teaching children about money is an essential responsibility that a parent needs to undertake. Many children's impression about money was built from a tender age and crystallized in adulthood. That is why it is essential to teach your kids the right mindset about money right from when they are in diapers. They’ll have you to thank for that later.
If you are interested in ways to enlighten your kids to be financially intelligent, then stick to the end.
For toddlers and kindergarteners
1. Cultivate in them the habit of saving by using a transparent jar for this purpose.
It’s no secret that the way to build financial wealth is by saving and investing. To cultivate this habit in your young child's mind, put up a clear jar for this purpose of saving. That way, they can practically see their money grow. A piggy bank is good, but it will not be a graphic example. When they see their money grow, they will see the benefits of setting money aside for savings. Make it a big deal whenever they put aside money in the jar and continuously harp on the concept of money growing. Soon, they will catch on to the idea.
2. Lead by example
Kids learn more from what they see you do than what you tell them to do. If they see you whip out your credit card at the slightest whim, they will soon learn that habit, and that is something you do not want them to know.
3. Inculcate in them the value of things
It is not enough for a child to ask for stuff and keep asking. Let them know that those things, his toys, a chocolate bar, all cost money. Don’t just tell them about it, but take them to a grocery store and let them see you exchange money for that very thing they want. That way, they will begin to see the value of things and appreciate the importance of money.
For children between the ages of 6 and 12
4. Let them know what the opportunity cost is.
At this age, a child should be able to make buying decisions when presented with a fixed amount of money. This means they would have to decide whether they want a video game or a pair of shoes instead. Let them know that one doesn’t get everything one desires all the time, so they have to be groomed in their decision-making abilities.
5. Do not give your child money just because
Bringing up a child this way can be harmful because it might cultivate the mindset of feeling entitled, and they might not value the hard work that goes into making money. To curb the tendency of this coming up, start to give commissions rather than allowances. Attach a monetary reward when they get house chores done, clean up their rooms, do well at school, and the likes. When you put this system in place, the child will begin to see that money is earned, not just given, and they will learn to value it.
6. Quell impulsive buying.
Many children in this age group are very impulsive buyers. Whenever this comes up, rather than giving in, tell your child that they can use their hard-earned money to make the purchase. If they still want to go ahead to do that, persuade them to wait for at least 24 hours before they make any purchases that exceed $15. The item would probably still be there, and all the excitement might have worn off, and they’ll be able to make a better, clear-headed decision.
For teenagers.
8. Let them learn to be content.
In this age of social media and the internet, it is easy for teenagers to get carried away by others' lives via social media, and the tendency for comparison can set it. But it is up to you to teach your kid to be content with and grateful for what they have. You don’t have to buy a brand new car just because someone else did so, or spend thousands of dollars on a birthday party, just because the most popular girl in school did it. Teach them that they can still enjoy a meaningful and wealthy life without going overboard with spending. No one needs to impress anybody. Most people don’t care anyway. Being grateful is critical.
9. Opening a bank account for them is a good idea.
Opening a basic bank account for your kids at this age is a great way to build their responsibility towards their financial independence. This will be highly beneficial, especially if you’ve trained them to be financially intelligent right from when they were little. When they build their confidence in these matters, transitioning to a higher level account when they grow older will not be difficult.
10. Let them contribute towards their college education.
When they do this, their sense of responsibility heightens, and they will not be driven to make impulsive spending decisions.
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