Teaching Financial Education in the Home Helps Children Succeed
Are you looking to give your children a head start towards an easier, more successful adult life? Teaching them about finances might be easier than you think; ensuring that they understand complicated financial terms is a great way to begin. You can do this by teaching your kids simple, yet practical lessons they can learn at home.
How Children Can Earn Money
The first thing you need to teach your child is how they can earn money, or how people do it. This can be done simply by assigning simple tasks or giving them errands to do in exchange for money. Such activities will give them an inside look at how money is earned, and you can start implementing these strategies with your kids whenever you think they’re ready, no matter how young they are.
How Budgeting Works
Before your child learns how to spend money, be sure that you teach them how to budget first since it’s one of the most crucial parts of managing finances. We all know how being unable to budget can lead to financial problems, so take the time to sit down with your children and teach them how to divide the money they earn. Doing this will help them learn how to achieve financial freedom.
How Saving Works
We all know that saving plays a huge role in financial literacy and success. Because this works hand-in-hand with budgeting, we need to teach children how to set aside some of the money they earn to start saving. As a parent, you can also encourage them by acting as a bank where you can help them earn interest like you would in the real world. Setting up charts or graphs for your child to fill in as they get closer to their goal is one way to translate this concept into an observable activity.
How Investing Works
Much like budgeting and saving, investing is another vital part of financial management. To secure financial freedom in the future, they will need to learn how to invest. While there aren’t many ways for you to demonstrate this to your kids, you can always use children’s books about investing to give them the basic idea.
How Spending Works
This should be the last thing you teach your children if you want to teach them to be financially literate. Even as kids, they will already have a slight idea of what it’s like to spend money and how that process works. But it’s your job to teach them how to spend money wisely while explaining to them that spending impulsively can lead to financial problems. A good way to do this is to give them cash and allow them to buy items or toys at the store. They’ll be able to experience purchasing power for themselves, as well as realize that money is finite and they can only spend as much as they have — a good lesson to learn young to avoid going into debt.
Other Ways You Can Help in their Financial Journey
As soon as your child is old enough to know that they shouldn’t be putting pennies in their mouth, you can start introducing them to ideas about saving, budgeting, and spending. However, remember that some kids will learn faster than others and that not all kids will be able to pick it up quickly. The more consistent you are with your lessons, the faster the light bulb will turn on inside their minds.
Below are a few other ways in which you can help your child to be financially secure in the future.:
Create Opportunities for Them To Earn
Providing your kids with money will allow them to make decisions on how they should use it. However, it won’t work if you just hand them money — instead, be sure to have them do something helpful in exchange for an allowance. Money that they have to earn is much more valuable than money that is simply given to them.
Chores are a great way to train them because it provides a way for them to earn while also instilling that they are expected to help around the house as part of the family. There are also different ways for you to enforce this; some families will pay kids according to their age, while others will pay a “salary” that goes straight into their children’s bank account every month. In turn, kids can also negotiate salaries based on the number of tasks they commit to doing.
Help Them Make Wise Spending Habits
Apart from teaching them how to earn money, you can also provide them with an allowance system that will help them to learn to live within their budget. By providing them with a set amount for the month, your kids will eventually learn that they need to spend intentionally if they want to make it until their next “payday.”
This will teach children to track how much money comes in and how much they spend, along with any savings they might have. Implementing such strategies with them now will help them flourish once they enter the real world as an adult.
Be a Good Financial Model
The way you handle and discuss money in front of them is just as important as the lessons you try to teach them. For instance, if you keep complaining about how you spend too much, then go on a shopping spree, it will send them mixed messages. Ensure that you also practice what you preach — don’t just have them do the house chores, but work around the house yourself. Your kids notice what you’re doing and will pick up on more than you realize.
If you want to instill good saving and spending habits in your children, you need to show them that you also do it. Apart from doing all the right things, make sure that you do them consistently — educating children about finances can take time. But if you can communicate a clear message to them while showing them the right way to do things, they will certainly thank you in the future.
Conclusion
The world of today is full of many uncertainties and challenges that the new generation will need to face once they reach adulthood. Nowadays, we need to raise independent thinkers with a good understanding of finances and a wide range of skills to help them keep up with the ever-changing demands of life. Teaching them about financial literacy will prepare them to take on anything thrown their way even when we’re no longer with them.
