Money is one of the most essential parts of our lives. Therefore, teaching children about money skills at an early age will leave them better off with money management as adults.
As a matter of fact, attitude towards money is engraved from childhood, especially through parents. So, starting off with setting an example is a good way to go about it.
Here are a few fundamental money skill teachings that you need to start engraving in your child’s habit at an early age.
Teach: The Difference between essential needs and wants
This is one of the most important concepts to understand and imply. Additionally, once the concept learnt, it will make future money conversation with children easier. You can start by talking about pocket money and how it doesn’t have to be much in able to live a decent life.
For example, discuss with them on an amount that they will be entitled to receive (monthly, weekly, daily?), on what basis is the amount given, such as – a reward for good behavior or helping out in house chores. This will help them to understand that money is earned and not free. There is always a give and return policy attached.
Furthermore, hold conversation with your children to learn about where and how they spend their money? Are they making it productive (in needs) or just merely wasting it off (in wants)?
Teach: Budgeting and its importance
Budgeting is also a great way to help your kids polish their math skills. To get started, gift your child three piggy banks, titled as for:
- Savings: This piggy bank should be used to save money for goals. Such as, you child has been eyeing a new gadget for long. Explain to them the importance of saving that will eventually lead them to achieve their goals (new gadget in this case). Get them to do that math! Such as, how much do they have and will need to get to the X amount for the gadget.
- Spending: This piggy bank should be aimed at buying goods. Such as food, books, clothes, etc.
- The Future: This piggy bank will hold money that cannot be used or touched for a given period of time. For example, a school trip or vacation. This will teach your child to put away money for special something or to be used in a rainy day!
So, every time your child is handed some money, they can decide which piggy bank to put in. Over time, this helps in money management skill in bank accounts.
Teach: Importance of a savings account
Encourage and work together with your child in signing up for a savings bank account. A large number of banks offer savings account for kids to open with as low as 1 pound. These accounts are usually free of any additional charges or fees. Once this is done, your child can move from piggy banks to real banks.
Aforementioned are some ways to help your child in teaching the importance of money. However, the best teaching is through practicing what you preach. So, be sure to set an example your children can follow in adulthood.