Money makes the world go round. It is used to buy basic necessities, food to eat, and pay living expenses that come around once a month. While it certainly isn’t everything, the importance of money in everyday life is undeniable.
As easy as it is to spend, earning money can be quite difficult, especially for those who aren’t well-off and need to work extra hard, sometimes even juggling two or three jobs at once. It’s important to be practical and understanding that early in life makes it easier to manage one’s finances.
Parents should be thinking about how to introduce to their children the concept of money, its importance, and value. Even if the family is pretty capable of addressing not only the needs but also the members’ wants, it’s still vital to teach the kids financial literacy. Not only will it help them in life later as adults managing their own money, but they will also be more understanding as a child if there are certain things they want that they cannot get. Here are some ways to get started:
Encourage them to save money
Money’s main purpose is of course to be used and spent. However, that isn’t always the case. Most times, children tend to be impulsive and will spend their money on something that they will toss in the next hour or so or use money just for the sake of using it because that’s what they see others do.
Get the children into the habit of saving money. Give them a piggy bank or even a clear jar to put it in so that they have a better view of their money gradually increasing overtime.
Saving money teaches them discipline and allows them to plan and set goals. With younger children, it’s better to start with baby steps though. Rather than teach them how to save for long-term goals like saving for the future, set those goals into short-term ones such as a toy they want to have. This will lay the foundation of their saving habits later in life, and will help them become better and more patient in saving for long-term plans.
Create opportunities for the children to earn money
While an allowance definitely gives kids more exposure in having money and enables them to make decisions on how they should handle it, it might be a good idea to let them know how money is earned once in a while. This can be accomplished by requiring them to do some chores around the house and help out with the family if they really want to be paid. Furthermore, when giving an allowance, make sure the amount is appropriate in relation to their ages as well.
Help them learn how to budget
Money is hard earned but in a blink of an eye it also quickly goes by once spent. Addressing the difference between needs and wants is an important topic to introduce to the kids. It teaches them to weigh what items at the top of their heads are their ‘needs’, which can be something that they will use everyday, while the ‘wants’ are what they simply wish to have. Of course, wanting things isn’t bad, rather it’s normal. But on a budget, they have to carefully plan how they will split their money. Later in life they will also inevitably encounter the same situations with money.
A good way to help them budget is to help them proportion their money. Perhaps the first half of it would go to their savings while the other half can be used to spend it on anything they like. Without forgetting the value of saving, budgeting can help the kids to be smarter with their money and to have an idea of just how precious money is.
Be a role model
It’s no secret that children tend to emulate those before them. Which is why while instilling these important financial lessons, don’t forget to also be good role models and do the same with the advice that was given to them. Basically, practice what you preach. Approach and manage money the same way they have been taught to do so and it’ll make it easier for them to see just what these teachings do and how they affect everyday life.
Furthermore, avoid sending mixed messages about money management. For example, if money is low in the household and is only enough to pay the bills but the kids are taken out to the mall and are allowed on a shopping spree, then it would definitely create confusion about how they should make financial decisions.
Teach them how to avoid impulse buys
The fear of an item going out of stock the next day is real. Even adults get that too, but especially children. However, rather than succumb to the thought of buying something that wasn’t planned or on the budget, teach them to think twice and hard about it. Often, giving it a day to cool off and clear the head can help in weighing down the decision of whether it’s a must buy or not. At the same time, let them know that they can earn the money they need by doing household chores.
Teach them contentment
Plenty of companies offer the shiniest, newest piece they have in their catalogue, while social media is a nest filled with videos and pictures of people living their extravagant lives, and while it definitely piques the interest of many, it’s important to know that they don’t really need the latest and greatest items, especially when its price is beyond what can be afforded. Again, it’s not bad to have wants, but what’s important is how these wants are managed and how they perceive what they have.
Rather than letting them solely fixate on what they’re missing out on, help them see and understand that what they have is actually, more than enough. For example, while the car given to them isn’t a fancy Porsche, it still serves its purpose well by going from one place to another and makes travelling easier.
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