What conversations are we having with our children; about the birds and the trees and to stay away from drugs? Very smart! Let’s add finances and how to be financially responsible while you’re at it.
The most common question among parents is at what age to introduce the topic of money to young children. The answer is always as soon as they can learn to count. Think about it; every adult was once a child and whatever values that were instilled in us as children are the ones we are going to hold on to for rest of our lives. They do not call them formative years for anything.
The role of schools is very crucial however different from that of parents. Most will agree that some changes are overdue in the education system to accommodate and reflect the changes in today’s world but that would take years of research and red tape before it passes and is applied in schools. More practically, what do children need to learn about finance from their parent?
- Honest and hard work is the only way to earn a living. Install the virtue of legal and hard work (not child labor) in them by giving them chores around the house and rewarding them for their hard work.
- How to save: A good lesson in saving is for them to save first and spend what is left and not the other way around. Buy them piggy banks and open saving accounts for them and encourage them to be the ones to make deposits under your supervision.
- Be a good example: Those little eyes and ears are learning more from what you do than what you say. Make a smart decision with your money and they will learn as well.
- Goal setting: Saving is good but saving with a purpose is even better. Encourage your children to set saving milestones and to save up to buy the things they want.
- Reward their motivation: If they are saving up to buy a bike instead of asking you to buy it for them, reward their motivation by offering to pay for half if they can come up with the other half. Teach them to work for commissions rather than allowances.
- Introduce allowances: If your child is above the age of seven, allowances can be a great way to teach them about budgeting and boundaries. Have a conversation about their expenses, like school lunches, and give them their weekly allowance to manage. Monitor their spending habits and advise them accordingly.