8 Ways to Teach Your Kids About Finance

Financial literacy is a precious life skill to teach your kids. Because this skill is not constantly taught at school, as a parent, you should take on the responsibility to ensure your kids have a firm grasp of this priceless skill. Financial knowledge and understanding set your kids up for success in the future. Although it might seem like it is a big task, once you start introducing them to the basic financial concepts, you will realize how easy the process can actually be. When you instill fundamental financial skills into your children, you will be preparing them for a stable future where earning, saving, and spending will not be a problem. Below are some of the ways you can teach your kids about finance.

1. Explain where the money comes from

Explaining to your kids where the money comes from can be a great lesson. They will understand that money does not just come from their dad and mom’s wallet, but that you need to work to earn money. Learning this will help them be aware of how work relates to money. Your kids will start appreciating the value of hard work, which will make them more motivated to earn their allowance. 

2. Let them earn and spend allowances

Helping your children earn allowances practically teaches them how money works. When they earn money by completing tasks, they will learn to work harder to make more money. Earning their pocket money this way will also prevent them from acquiring spendthrift and impulsive behaviors.  

You should be clear about the kind of chores your kids can perform at home. There should be some routine chores they need to do as part of the family and others to earn money. You should encourage your kids to save part of the money they earn instead of spending all of it immediately. 

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3. Teach your kids about delayed gratification 

Nowadays, it is very easy to get anything you need instantly through online retails or delivery within a few days if you have the money. Credit cards are making it easier to spend through the buy now pay later principle. However, you do not have to buy something on credit, and if it is not an urgent need. The virtue of patience is something valuable your kids need to learn, but they will model this behavior better if you practice it yourself. 

4. Teach them about credit cards

Today’s society heavily relies on credit cards. There are many benefits associated with credit cards. Helping your kids understand how credit cards work by being aware of interest charges and high fees that might come with these cards can be a great life lesson. They should also learn about the risks associated with credit cards and how to use them appropriately. Explore different kids’ credit cards available to know which will be perfect for your kids. 

5. Work on your own relationship with money

Your kids constantly observe and absorb your behaviors. If you are prone to spending above your means, children will acquire this behavior and learn that money is all about spending. Let them learn that no matter how scarce money is, there are ways to satisfy most needs without acquiring debt. Your kids watch how you spend your money, and their actions with money will reflect your behavior. As a parent, you ought to be a good example for your kids. 

6. Help them open a bank account

Financial management is a crucial step to being successful in life. Opening a savings account for your children is one way of doing this. Your kids will watch their money grow through interest accrued, and over time, they will be able to access real-life financial basics that they can apply in the future. 

Nowadays, you can carry out many transactions online using your smartphone or computer via banking websites and applications. Help your children use their computers and mobile devices to access their bank accounts to monitor their savings. Also, physically having your kids visit your nearest bank will help them develop financial habits and bank etiquette, such as interacting with bank tellers and keeping receipts. Plus, banks may not be boring for kids, especially when it is their first time.

7. Get your child a debit card

With a bank account, you can help your kids access a debit card. There are various kids debit card options available, so you should first navigate which bank has the most favorable services. Debit cards teach your kids how to spend, save and invest. Most debit cards provide parental controls where parents get notifications of transactions.  

8. Encourage kids to save

The concept of saving may not be easy to teach kids, especially those below the age of five. When kids are at this age, you need to invent some fun ways to teach them about money and saving. However, it is never too early or too late to teach your children about money. After giving your children allowances, please encourage them to save instead of spending all the money right away. In this way, they will learn the virtue of patience and how saving helps solve more significant problems in the future. 

Let them save money for their favorite toy, pocket money, or trip. There are many ways in which you can encourage them to save, such as providing them with a clear piggy bank, holding saving contests, or opening a savings bank account. Another method that can help them remember why they need to save is printing off a picture of something they long to buy and placing it in their room. Ensure you reward them after reaching their target. When kids get satisfied after purchasing something they have been saving for, it can be a lifetime lesson. 

Take away

Kids are likely to follow your lead. If you keep complaining and stressing about money in front of them, this might result in them having issues with money in the future. If kids can solve financial challenges when they are young, they will be prepared to face any financial problems in the future.