Too many of us today ignore our financial situations, sweep issues under the carpet or simply don’t understand our own finances.
It’s too late for all of us now, but the best way to properly understand your personal finances is to learn about money from a young age – which is why you should teach your kids about money now.
Teaching your children about money will ensure that they are well-equipped as possible to handle their own financial circumstances down the line. It’s not too difficult to do either – here are a few money saving tips to get you started.
7 Simple Ways To Teach Your Kids About Money
1. Create jars for both saving and spending
When they receive their pocket money, ask them to divide the money between both saving jars, explaining that they can both buy things now and save money for bigger purchases.
2. Set saving goals
It’s easier than you may think to teach kids about saving from a young age: ask them to choose a toy they want and explain how much of their pocket money they’ll need to set aside each week/month to afford it in a certain time frame. Top up their savings every time more money is added to the pot.
3. Let them make household spending decisions
When they’re a little older, give them a small amount of money when you go shopping and tell them they’re responsible for buying certain things, such as the fruit for the week, and that it all has to come from that money.
buying certain things, such as the fruit for the week, and that it all has to come from that money. This is a great way to teach your kids about money as they learn to make their own financial decisions.
4. Open a savings account for them
Explain how savings accounts can make their money grow over time (even with relatively low interest rates!) and show them how their balance is changing over time.
5. Involve them in family financial conversations.
Another great way to teach your kids about money is to get them involved in family finances.
For example, if your washing machine or vacuum cleaner dies, talk about how important it is to have money saved in case things like this happen.
Describe the situation to them in their terms too: how would they cope if their favourite toy broke and they had to replace it? Would they have enough money saved up to do so?
6. Give them the chance to earn money
The earlier children start working and understand what it’s like to earn their own income, the more likely it is that they’ll become more independent from a financial point of view.
Offer to pay them for doing chores around the house or garden: things like vacuuming, sweeping leaves in the autumn and doing the laundry could all net them earnings.
When you pay them, give them a breakdown of what they’ve done and what they’ve earned as a result – and let them know how they could earn more.
7. Help them to keep track of their finances
While spreadsheets may not be suitable for young children, you can draw up a piece of paper that has incoming money in one column and outgoing money in the other column to show how much they are spending and how much they have left.
If they learn to keep track of their money from a young age, they may well find it easier to do so in the future.
Talking with children about money from an early age helps them to form good money habits that will last a lifetime. The sooner you start teaching your kids about money the better, but you can of course make a difference at any age.
How do you have or start money conversation with your kids? What are the best ways you have found to teach your kids about money? You can leave your comments below. We’d love to hear from you!
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