Enter your email below to receive weekly updates from the Ashton College blog straight to your inbox.
By: Kailash SrinivasanPublished On: May 27, 2019
If there’s one gift you can give your children, it should be teaching them how to value money and be financially responsible. Money is an integral part of our lives, and the ideas and attitudes children form about money today is what they will carry with them into their adulthood.
As adults, we may have many misconceptions, negative feelings or limiting beliefs about money: money is evil; if I make too much money my friends won’t like me; I can’t afford to take a vacation or buy a house, and many other such thoughts.
Our parents are responsible for we have inherited all our beliefs from them. Thus, it is essential that you, as a parent now, don’t make the same mistakes by passing on those ideas to your children.
Here’s a look at five ways you can instill good financial planning skills in your children.
You want to show good financial habits, so your children can learn from you. If you’re secretive about your finances and don’t involve them in day-to-day decisions, that’s not going to help them. So make sure that you openly discuss your finances together as a family. You can talk about monthly budgeting, for instance, and encourage them to ask questions. Tell them what the inflow and outflow; where’s the money going? Internet, groceries, phone, cable, medical insurance, and other expenses or investments.
You can turn every moment into a teachable moment. For example, when you go grocery shopping, encourage them to stick to the list and pick items giving the best bang for the buck; explain how debit and credit cards work. Many children grow up thinking that cards don’t cost a thing and are an endless source of money.
If you demonstrate good financial behaviour, your kids will too. This means sticking to a budget and spending money responsibly. If you bring them to a restaurant every night or order in all the time, your kids will assume this wastage is normal. You don’t want them to take money for granted.
You don’t need to be a certified financial planner to teach your kids how to save. You could get them a piggy bank or open a bank account for them, depending on their age and maturity levels. They can contribute toward their savings each month and see the results from time to time. It will act as a great motivation for them to keep going.
If they want something, like the latest toy or gadget, they should understand that they need to earn it. You could pay your kids for chores and have them keep track of how much they made. The money they get for birthdays or other special occasions should also go into this pool. Giving them an allowance is another way of trusting them and teaching them financial responsibility.
Spending their own money towards something they want will make them question the true value of the item, and if they do go for it, they will cherish and take care of it for a long time. When kids learn to save early, money holds meaning for them. They understand the power of having money, instead of blowing it away on things they never needed.
Goal setting is beneficial in all parts of our lives: health, education and others. It is especially useful when it comes to your finances. Inspire your kids to dream bigger and importantly, teach them to plan ahead, which will help them reach their financial goals, however small or big they may be.
All of us learn from making mistakes. That’s the only way to guarantee a lasting impression. Suppose your child is adamant on something frivolous, a video game or some new toy and you know they are going to get bored of it soon, let them go ahead and use their money to buy it.
It’s the only way to teach them a vital financial lesson: waste your money if you will, but then that means you will have to wait till the next cycle till you get paid again; which means the child has no money to spend on anything else. So, let them fail and realize their follies.
It’s crucial to shed all negative emotions associated with money. Money is energy. By itself, it is neither good or bad; it’s only a piece of paper. What makes it good or bad is what one uses it for.
If you teach healthy money habits to your children, it will also help them get over the fear of losing money or not having enough of it. It grows by giving. So encourage them to think about issues they care about, like endangered animals, climate change, underpriviledged children and ask them to donate to those causes. There is happiness in giving and sharing, which they need to experience.
There’s no one way of teaching your kids about finance, but as long as you create awareness and vigilance about money, get your child thinking about it, he or she will be prepared for their future. And who knows your child may become so financially savvy, he or she may end up becoming a certified financial planner and helping others with their finances.