Tips For Teaching Children About Money

There are many life skills that you must teach your children at an early age, including health and hygiene, cleaning, time management, and money management. When it comes to teaching children money skills, parents can fail to do the job right if they feel financially inept themselves. 

While teaching children money management may feel like a difficult task, it is one of the most important life skills that you must teach your children at an ary age. Here are some tips for teaching children about money: 

1. Start Early

Most people don't start teaching their children money skills in early childhood. Research suggests that the money habits people adopt in their adulthood are set by the age of seven. However, financial lessons you inculcate your children with must be appropriate to their age. 

According to experts at Money Advice Service, young children are not mini adults and money lessons must be age-appropriate.

You must start teaching your children money skills as soon as they are able to count pennies. By making money the topic of regular family discussions, you can instill healthy money habits into your children. 

2. Teach them the difference between wants and needs. 

When your child makes occasional demands for toys or games, you must say no frequently to keep their just-for-fun purchases in check. Children need to hear 'no' because as adults they will have to hear that often. 

You must make them understand the difference between wants and needs. It is very important to inculcate the habit of sensible decision-making in them. If your child asks for a toy that costs $100, you must explain to them how long it takes for an adult to make that amount of money. 

Regardless of whether or not you can afford something, you must make your children habitual of resisting temptation and overspending. Most parents use 'we can't afford it' as a default response when children make demands for something expensive. However, it sends the wrong message and may engender future anxieties. 

3. Teach them different roles of money. 

Your children must know all roles of money, including spending, saving, donating, or even investing. If you have children under 8 years of age, you can give them labeled jars to teach them how money can play a variety of roles in their daily lives. You can give them one jar for saving, one for spending, and one for donating. When they receive cash as a birthday present or by doing chores, encourage them to divide it equally among the jars. 

If you are teaching money skills to older kids, you must encourage them to allocate a small proportion of their savings to investing. This will help foster financial literacy in your children. Older teenagers can also be introduced to the idea of online trading, which can be utilised if they wish once they reach working age, and have accrued the foundation of a savings cushion. It should also be ensured that the concept of safe trading and risk versus reward is also clearly understood.

Do what you teach. 

If you want your children to take everything you say seriously, you must act upon your words. Children are greatly influenced by the spending habits of their parents. They tend to copy the behaviors of their parents. If parents splurge on unnecessary things, children may start seeing money as an unlimited resource.

Conclusion

Teaching your children about money might not be easy, but the long term rewards if done right will stay with them throughout their lives. If you can put the above guidance into practice, it will help your children to be responsible with their finances.