Introducing your children to the art of managing money is as important as helping them develop other basic skills. Money management is an essential life skill to have and it is not one those skills that kids automatically pick up by themselves.
In today’s world it’s not easy to keep kids financially grounded. Children are not usually included in discussions around the household budget or decisions around which stocks to invest in. And, it’s not usually on your ‘To Do’ list to teach your kids about money. However, that can change if we provide them with firsthand experience in earning, saving and spending money.
Teaching kids about money is crucial if you want your kids to grow up financially responsible and independent. One of the essential money lessons kids need to learn at an early age is the importance of saving a portion of their income and having realistic savings goals.
Saving money is a habit that can take time to build; and some adults have yet to master it. Setting short-term and long-term savings goals will help kids develop the skill of forecasting with their finances and may even discourage impulse spending. Teaching kids to be responsible with money can help them make savings goals for the future.
One can do this by turning your day-to-day activities into learning experiences. Trips to the bank, store, or the ATM machine, for instance, can be a perfect opening for a discussion about your values and how you use money. When children are very young, you can work money concepts into your child’s imaginary games, like playing pretend store or restaurant.
Give your kids opportunities to earn money. Consider the idea of paying an age-appropriate allowance to your kids. Whether you believe that it’s better to tie an allowance to doing chores, or to give a small stipend without conditions is a matter of constant debate. Either way, an allowance is a great way to teach kids how to handle their own money.
In addition to saving money for things they want, kids need to learn the value of saving money for their future and recognize the importance of putting money into an account where they can keep earning compound interest on the balance.
Teaching kids financial management can go a long way in their lives. As parents we shouldn't just keep the money talks to ourselves and include our kids as much as we can. The more they know about how your money is managed, the better equipped they’ll be when they grow up.
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