Some parents think that it might be too early to teach young kids about how to handle money. That they might not be able to get a full grasp of what it means to save for something you want or for emergencies. But even schools have started putting financial literacy in the curriculum for kids as young as 11 years old.
The way children understand how money works and the habits that they pick usually carry through to their adulthood. This is why it’s important to give them a good foundation on finances while they are still young. Here are some of the ways you can teach them as a parent.
Teach them the difference between a ‘want’ and a ‘need’
Often, we use the word ‘need’ a lot in front of our kids repeatedly. “I need to buy new curtains. I need to buy new plates,” when in fact you only want to. Then they see you happy once you get the things you want but not necessarily need. This is probably one of the reasons why they equate possessing things to happiness. By teaching them the difference between wanting and needing, you can avoid being on the receiving end of the tantrums whenever they are not getting what they want.
Give them a piggy bank
Teach them how to save by giving them a piggy bank. Tell them that by the end of the week, they should still have enough money left to put in their piggy bank. You can teach them to start small by first by saving all the coins. Then upgrade it a bit by teaching them to save in increments and gradually increase the amount they save every month.
As a treat, tell them they can choose to buy whatever they want using their savings money. But it’s important to tell them that they shouldn’t be using all of it on one purchase.
Open a savings account
Another way to make sure that they are able to save their money is to open them a savings account. Using the money they have saved using their piggy bank, open an account owned and controlled by them. There are banks which offer junior accounts for kids. Give them the responsibility to control and manage their own money.
Tell them to budget wisely
An effective way of teaching them how to handle money is to let them spend some of it by knowing how to budget their expenses. You need to teach them to list down the things they are planning to buy and divide it between wants and needs. They should be prioritising what it is they need to buy first before going through the list of wants. Tell them that to make sure their savings grows, they need to set a budget for their expenses every time. For instance, set a budget for their weekly spending and try not to go over it.
Involve them in house expenses
In the household, there are expenses they can get involved in. For instance, spending for food can be a great way to teach them how to spend for quality and not quantity, but still making sure you are able to keep within the grocery shopping budget. For things like looking at international schools in Singapore fees for when they start moving up a level, these may seem like decisions that only parents can make, but you can make them check the school curriculum out and ask them their opinion about it.
By teaching them the value of money and how to save, you will help equip them with good money financial management when they become adults.
This article cannot be re-published without permission.