Among the most important things that parents can impart to their young ones is the matter of money. The ability to handle money and plan for its use, as well as how children learn to invest in this resource, helps them become financially secure. However, parents are often unclear about when to start such lessons or how to make such lessons fun. This article gives definite suggestions on giving children money lessons that are simple enough but very effective.
Start Early with Fundamental Concepts
Educating children about money matters should be initiated at as tender an age as possible. When it comes to toddlers and preschoolers, be simple. Explain the new coins and bills and make them understand the value of every amount. Experts encourage using such utensils as a toy cash register or toy store to help make learning more playful. Explain to them what it means to trade with money so that they learn the basics of earning and purchasing.
Introduce Earning and Saving
As children grow, make them understand there is a lesson in earning money. For younger children, it is advisable to award them a small pocket money based on the hired responsibilities that children of their age can perform. For example, they could receive dollars for cleaning their room or watering in the garden.
Teach them to save with the help of a piggy bank or by managing a kid’s savings account. Explain the difference between spending it all now and making some of it grow through saving a part of it. Money provides motivation when they match it with their savings.
Teach Budgeting
When the child reaches elementary school, they can learn about basic budgeting. Give them a little stipend and instruct them on allocating it among saving, spending, and donating. This also helps them in setting priorities and realize what delayed gratification means.
Make sure they understand the concepts of saving, spending, and giving by giving them jars or envelopes labelled “Save,” “Spend,” and “Give” to understand the difference. Children’s applications and games can help teach budgeting in the context of the use of digital products.
Discuss Needs vs. Wants
Teach kids between the things they need, (food, clothing, etc) and the things that are not strictly necessary (toys, treats, entertainment, etc). Make real-life examples during shopping sessions on why some things are needed while others are not.
Remind them to make rational decisions regarding their consumption. For instance, if they want a new toy, they set a savings plan for the toy rather than going out to purchase one. From this, they learn the virtue of patience and the use of money earned through working.
Introduce Investing and Financial Goals
For preteens and teenagers, it is time to explain more complex ideas like investment and money-related goals. Describe how money can become more by accumulating interest and buying stock, bonds, or mutual funds. One should employ examples from simple cases or even make models to make these ideas understandable.
Suggest them to make short-term goals that would, be as purchasing a concert ticket and long-run goals like college savings. Support them to record their progress so that you can encourage them when they achieve.
