With child bearing and caring being one of the most talked about subjects on the net, most parents now emphasis on teaching children good manners and safety. But when it comes to money, the same question still remains ‘Where to start?’ and ‘Why should we teach kids about money??’
Read on to find out all you need to know about teaching your kids about money.
Why should children be taught about money?
We are in an age where only credit and debit cards are used more than the actual money. So, it is difficult for the kids to understand and comprehend that buying and selling requires hard cash. It is important for them to understand how money is earned, saved or spent for the day to day necessities. Providing the children with high-quality financial education in schools helps them make informed choices and take responsibility for their actions in years to come.
What is the right age??
The best answer to this – start as soon as the child learns to count. It is important for us to understand that money is not a taboo subject and this needs to be clearly indicated to the kids. It is important for them to know that you slog to earn their daily luxuries.
Experts suggest that the concepts of money should be taught in an age appropriate way starting with the time when the child learns to count. Like at 5, you could start taking them with you on your shopping spree. At eight they can get their own piggy bank and at 15 you can encourage them to open a savings account. At 18, it should be about using the credit and debit card wisely.
The six simple rules!
These are some simple values and rules that will mold you kid into ‘Money smart’ ones.
- Delayed gratification
As adults we hear the word ‘No’ quite often, whether it is from an employer or from a bank. As children, it is important that they hear it too. It is important to teach the kids that they can get what they want when they know how to wait for it. It’s common for your child to ask for the latest games console. Instead of saying an instant ‘No’ or a ‘Yes’, you could ask them to earn a few reward points. This teaches them patience to earn what they are looking for. The wait is worth it and it seems sweeter too, since they have earned it.
- Teach them Wants versus needs
Your child might want the latest game console and also want the latest bicycle. There is a thin line between the wants and needs. Make your child understand the difference. This will prepare them for making good spending decisions in the future.
- Allow them to learn from mistakes
As adults we are not even near to being perfect. It is not fair to expect perfection from miniatures like the kids. Allow them to make mistakes. But also be cautious that they get the right lessons from the mistakes that have occurred. It is essential that they have the liberty to make ‘wise’ choices…but on the other hand, they need to know the consequences of their actions too. By experiencing negative consequences first hand, they will learn to make smarter financial decisions.
- Make it comprehendible
It is important that you get down to the level of understanding of your kids when it comes to teaching them about money. You can give them all the theoretical knowledge required, but then, it is always best to get a firsthand experience. Allow them some permissible amount of money for the Peggy bank. For smaller kids, it is best always provide money in denominations that encourages savings. As the kids grow older, you can teach them about savings account and interest rates. It is imperative for them to understand that the money they save should work as diligently as they do to accumulate a good amount. It is important to teach them that idol money does not grow.
- Preach Book keeping
Making record of every day expenses makes your child understand the value of money. Make it a topic of everyday dinner discussion so that your child comprehends the reactions of everyone in the family about day to day spending. Make it a habit to write down the family expenses at the end of each day. Live by example. You are the true mentor of your child. Every child learns by imitation. Establish this system for your child. Encourage children to place receipts from all purchases in the envelopes and keep notes on what they do with their money.
Children tend to copy what we do rather than what we say, practice book keeping and they will surely follow.