Here’s the truth: we don’t teach our kids about the value of money, they will in fact assume that it’s just something that automatically comes out of our pocket or wallet. Children these days are growing up in a materialistic world, and sooner or later, the desire to spend money on things they like, as well as peer pressure will begin. Although teaching a child about money may seem like a tough job, it can be done, and you should approach the subject as soon as possible to prevent and strain in parent-child relationships due to your child not fully understanding the concept of money.
Not sure where to start? Read on…
Money has a limit and you can run out of it
It’s easy for little ones to misunderstand where money really comes from. Especially when they see they magically make notes pop out of the ATM. Afterwards, they’d surely realise too, that shopping ensues, as well as bill-paying, filling up petrol for the car, etc. We can’t blame children for assuming that money is a finite resource, or that it’s manufactured in the ATM machine, for what they know is only what they see, unless their parents teach them otherwise! So, make an effort to start explaining to your child that you work to make money, and a bank is just a place that keeps it safe and that the ATM machine is merely a quicker way to access your money, or else you would have to queue up at the bank. Make sure that your child completely understands that the money in the bank will decrease quickly if it’s not used with care, so as a family, you’ll have to spend it wisely.
Always stay within a budget
The best way to teach kids to start managing money is to give them some to practice their spending, saving and prioritising. Of course, this will have to be paired with some money coaching from you too. Sit down with them and explain to them the importance of keeping within a budget when they spend their money. If they blow their allowance on a new toy figure or games software and don’t have enough left for something else that they really want, that’s actually a good thing, for they will be learning, quite effectively, about the consequence of overspending. They’ll also realise the importance of thinking twice before spending and prioritising too.
Teach patience: not everything we want has to be granted immediately
How many of us have experienced the utter regret of making a nonsensical purchase during weak moments in life? This is where the importance of delayed gratification comes in – and teaching children about this virtue may help prevent them from making the same mistakes you did during all those weak moments! The aim is to help them eliminate the mentality of “buy now, think of the consequences later”, which could easily land them in credit card debts later on in their lives. So, as much as you can, reinforce the idea that waiting pays off. If you really want to make an impact with this lesson, try this: Make a homemade pizza together with all the ingredients your child loves and enjoy it together. Then, microwave a store-bought frozen one and have it too. Compare the two and your child will surely find that the homemade one tastes way better for it was made with care and time.
Curbing impulse buying goes hand in hand with teaching delayed gratification. Show by example by taking your time with spending money too. Before you go shopping, create a budget. Outline what you’re going to buy, what stores you’re going to, and the price range for each item. Then compare prices online and clip coupons together (consider letting your child keep the savings so she sees that bargain-hunting pays). She’ll learn that planning purchases before you buy is a worthy thing and will soon get into that routine too.
Saving up for the future: start them young
Does your daughter want a new doll? Does your son yearn for a trendy pair of sneakers? Neither of them has enough money to get these things? Prompt them to save up for these desired items. Once they have enough, take them to buy these things for themselves and let them pay for them too, at the cashier. This serves to instill appreciation in them for money, and they will relish the good feeling of working towards a goal and being rewarded for it.
What kids may think about the ATM machine
Has your child ever said to you, “Just go to the ATM machine and take money out,” after you told him you can’t buy something he asked for? If so, it’s high time to explain to him where the money comes from, and it’s NOT made in the ATM machine, but rather, from your hard work and all the sacrifices you make for your family. Ok, we might be milking the situation a wee bit, but it really is up to parents to teach their kids smart financial habits.
Help them keep tabs on their spending
Simply knowing where his money went, and where it’s going, is a big step forward in your child’s money management skills. Have him use a notebook or computer to keep track of his spending. Keep a file handy, where he can store receipts and statements to keep track of what he has been spending his money on. This practice will set him
- Realise the importance of thinking before spending,
- Rethink his spending habits
- Find ways to cut down on spending
There should always be priorities
Kids naturally want to have it all, especially if they are brought up with little or no sense of limit. It’s hard for kids to set priorities, so sit down together and make a wish list of the things your child wants to do with his money. Then help him rank the list by discussing what’s important about each wish and which to tick off first.
They should learn to be more wary of sales gimmicks
It will serve you and your child well to help him realise the sad reality of manufacturers’ sales tricks. Healthy skepticism is crucial not only so kids can resist the allure of products on TV, but also because it helps keep them from buying into the messages behind the ads, which go so far as to suggest that like if you have the right clothes, shoes, toys, etc, you’ll be popular. This may actually be the toughest of all lessons for ads are everywhere, but with perseverance, we’re sure you’ll be able to educate your child and let him grow up money smart!
