Instilling wise money behavior in children is a primary responsibility of good parenting. For most mothers and fathers, effectively teaching economic fundamentals is less natural than guiding them on life’s other essentials. The Off Brand Guy offers some tips on how to teach kids good money habits for those having trouble figuring out where to begin.
How To Teach Your Kids Good Money Habits
1. Teach Children The Principles Of Economics
How to be good with money? Wise financial decisions begin with knowledge. Of course, little ones aren’t going to grasp economic lectures. Play board games with them that make learning about money fun. Classics, such as Monopoly and PayDay, introduce core financial concepts. If they’re craving something high-tech, many digital diversions do the same thing. Your little ones won’t even realize they’re absorbing vital lessons while tapping away.
Another method of imparting wisdom is talking. According to a poll conducted by family researchers at OnePoll, 73% of children want to spend more time with their parents. Take advantage of this craving by inviting your children to hear about your own experiences with money. Personal stories about getting into a bind or saving for something important have the potential to create impressions that last a lifetime.
Coming to terms with the financial decisions you’ve made is necessary before discussing them with your kids. NPR points out that what motivates our choices in life with anything, including money, is often rooted in emotion, not logic. Speaking with a therapist may help untangle sensitive feelings. You don’t even have to leave home to do so. Chatting with a professional can be done anywhere, directly from your phone.
2. Give Children A Sense Of Ownership To Learn Good Spending Habits
Create ways of showing that how you handle money has real world consequences to instill good money management habits. For example, involve your sprouts in grocery shopping. Collaborate on a list, and ask your helpers to research the cost of each item. Tally the final amount, comparing it against the budget. Let them know that saving a certain amount will net them a reward, such as a trip to the zoo or aquarium. Then, have them go through the list and decide what isn’t needed. They’ll inherently understand that sacrifice is sometimes necessary to get what they desire.
You can also provide payment for completing household chores. Allow them to manage their money and learn from their mistakes. There are debit cards for kids that let you do this without worry. The best ones come with safeguards, such as spending limits and parental alerts that facilitate monitoring activity.
You can use small ways to teach kids the value of money, such as giving them an allowance that they can use as the starting point for budgeting. Show them how to avoid going with popular labels by buying off brand products, and explain how it can save them money. Purchasing “just as good” products goes a long way towards good financial stewardship now and well into the future. A great educational tool is The Off Brand Guy’s website.
3. Help Children Start a Business To Understand Good Financial Habits
Youthful entrepreneurship has come a long way from lemonade stands. Spark your child’s money making ambitions by discussing potential ventures and how to move forward with building one. Talk with your offspring about business fundamentals without getting too technical. Discuss how to budget, handle employees, and create a marketing campaign.
You’ll also want to introduce the concept of financing to older children. Explain the myriad of options available for budding businesspersons, including bank loans, crowdfunding, and credit cards. Mention that these paths come with advantages and disadvantages distinct from using personal savings. Chat, too, about the interpersonal pitfalls that can happen when you take investment money from friends and family. Mention that you can create a loan agreement designed to protect everyone.
Showing kids how to manage their money is one of the best actions you can take to boost their odds of success. Like with financial investments, the more you put into the task, the greater the possible return.