Money management is probably one of the most common lessons every parent teaches their kids — knowing or unknowingly. You may have step by step discussions regarding money and finance or you might do this practically, like during weekly grocery trips..
You may be a techie dad who uses a children savings app to show the little ones how they can track their money online, or your might be a traditional mom who likes to keep track of the savings and expenses on a piece of paper. Whatever the method, teaching your kids how to manage money is a step you should start taking as early as possible. Smart management lessons in childhood can contribute to healthy financial decisions in adulthood. Here are a few tips you can start with on your journey to teaching your kids about smart money management:
1. Provide your children with an allowance and give them spending freedom.
As soon as they are able to handle money, start giving your children a fixed amount of money either weekly or monthly. Let them know that this money is for them to manage. Besure to explain the basic concept of purchasing necessities and luxuries. Make it clear that the allowance you provide is fixed and that it is up to them to make it work. If they want to buy something, then they have to be patient and save for it using their own money.
Do not give in when they beg you to buy them the latest pair of shoes from the shopping mall. It is only by acting firmly that they will learn the value of money and learn to spend wisely.
2. Offer them other sources of income.
Once your kids realize that the allowance they receive from you is a fixed amount, the thought of having extra income will certainly excite them. Once in a while, allow them to do extra chores and provide an incentive. This will motivate them to be more proactive in helping out at home and even lend a hand to relatives and neighbors.
Exercise caution with the frequency of offerings and which activities are rewarded. You certainly do not want them thinking that they will get paid every time they help out in the house. A proper reward system will motivate a hard work ethic.
3. Teach your children to save on a regular basis.
Encourage saving habits. Although they may receive an allowance, encourage your child(ren) not to spend all of their available funds.. For example, if they use their allowance for school meals, provide them with saving options. Packing lunch can save money spent on cafeteria meals. If they have the urge to buy certain items available at home,but are somehow too generic for them,draw a clear picture of the benefits of using the generic item. Using a generic item can often result in money saved for another desired item.
Every child is different but as parents, you have to guide them and help them start their financial journey so they can become adults who manage their finances well. Whether you’re earning six figures a month or you’re broke, your spending and saving habits will impact your children’s perception about money. The earlier you teach them how to spend and save wisely, the better the outcome will be. Just remember, set an example for them to follow.
Written by My Fab Finance Contributor: Olivia Williams.
Olivia Williams is a freelance writer and finance enthusiast. She is passionate about teaching people how to increase their income, manage wealth and eradicate debt.