Teaching good spending habits to our children is something that most parents struggle with.
Today's guest post by Raj from SmileTutor offers up some great tips that we can use to teach the principles of budgeting and finance to even the youngest kids.
Unfortunately, the majority of new parents cannot pass a small financial knowledge test.
Even parents don't always have a “rainy day” fund stored away, which is, of course, a good sign of balance.
In short, an unexpectedly huge number of people are not perfect in financial terms.
So, how can we expect better from our kids?
In the world where online shopping, credit/debit cards, and internet banking are the norm, it shouldn't amaze us that children don’t have the most excellent or near to good spending habits.
Let's assume that your son has a fistful of dollars and now he is raring to run to the nearby market for shopping. Will you allow him to go and do as he wants with that much amount of money?
Your answer depends on what you have taught your son about good spending habits.
Developing your child's mind about finances at a growing age will surely encourage them to think more efficiently and make better choices later in their lives.
Listed below are the top four methods to teach your child good spending habits.
The Discussion Is Key:
Before you proceed to any details about spending or saving money, it is necessary to start the conversation naturally.
Make your kids familiar with the best saving and spending methods by showing them how do you execute financial operations and apply math everywhere.
Allow them to find out the best deals on markets by comparing the prices at different shops and viewing through available coupons.
When doing everyday tasks or shopping, ask different questions like the those below to get your kid involved and informed of how you save and spend:
- Is purchasing a whole bag of apples more affordable than individual ones?
- How much tip should we give in a restaurant?
By teaching our children that money plays a crucial role in everyday living, they will recognize the value of budgeting and reconsider the way they use resources.
Many parents prefer to provide their kids an opportunity to make a small amount of cash by assisting with household tasks.
A growing kid can earn sufficient amount of money to load up a piggy bank.
For example, simple tasks such as feeding a pet or folding laundry can motivate them to think like they are making a worthwhile contribution to the house.
When you give some allowance to your children, it grants an opportunity to have a more in-depth conversation on how to create a budget and set savings goals.
Teach the Value of Saving Money:
Once your kid starts making money, even if it is in the form of an allowance, it is an excellent moment to speak about the value of saving money.
If he/she wants a new toy which he has seen in the mall, then help him create a strategy to save up for it.
It would be perfect to start with smaller, inexpensive things that they can quickly save up for within a few weeks.
Obviously, you want them to learn the importance of hard work and saving, but receiving that first reward is definitely an essential part of starting the first lesson at home.
Be a Role Model:
We try to teach our kids many life lessons while they are young and impressionable.
However, the challenge is to be able to show them how to handle their money efficiently.
Building good savings habits will definitely provide big dividends all the time in their lives.
During their early years, our children closely observe us and the actions of other adults too!
Therefore, try to be a real role model and have an explicit, open conversation about money.
Why Good Spending Habits are Important
Given how essential money skills are to operating daily tasks, it’s shocking that our primary education doesn't involve any lessons about money.
As a parent, though, we can teach our kids some fundamental financial skills— and we should.
Make sure to talk to your children about your own money spending habits and budgeting on a regular basis, give them an allowance so they can see the rewards of their hard work, teach them that it is also important to save, and also always be a good role model.
How Do You Teach Good Money Habits To Your Children?
Share your ideas in the comments below.