How to Encourage Good Money Habits in Children
Your children are like sponges. Even when you think they aren’t watching, they’re taking in everything that you say and do. That’s why it is so important to start teaching children about money and its value while they’re still young. It’s your job to help them learn and experience the do’s and don’ts of money or let them make their financial mistakes now before it’s too late.
Below are some great tips to help get your kids financially literate.
Involve them in your budgeting
Kids can understand so much more than we give them credit for. Give them the shopping list when you go to the supermarket and let them help you choose the items off the shelf.
Show them the prices per 100 grams and how you choose the best option.
Explain sales to them. Is it always cheaper just because it has a bright sign next to it? Just because it’s on sale, do you really need the item?
Even when you choose a new phone plan or an electricity company, talk about the pros and cons with them. It might even help you to have a sounding board, too!
Get them to save
There are lots of different ways to get kids to save.
Most schools run a banking program and that’s a great little system for your family to hop on board with. Just make sure that you use it to its full potential! Get your children involved. Look at the balance at the end of each month or set a goal to work towards.
Are they saving for that toy that they’ve been eyeing for? Perhaps, it’s the big holiday/fair that’s coming up. Giving them something to aim for will help your children understand why budgeting and saving are important.
Another fantastic way to help children save is the “Jar System”. This is great for younger children or visual learners.
- Set up 3 jars and label them. Write “savings”, “spending”, and “gifts”.
- Have your child sort their money into the jars so they can physically see how much they have for each category.
- When a family member’s birthday comes around, have your child dip into their “gifts” jar to purchase a small present. It will make the gift much more special. Plus, it’ll teach your child a valuable money lesson.
Some people choose to set up a 4th jar labeled “charity” where you can encourage your children to give to a cause that is close to their heart. It’s never too early to teach children the value of giving.
Let them wait – delayed gratification is a winner
Delayed gratification ties in perfectly with the concept of saving. If they don’t have enough money for something, they can’t get it. It’s as simple as that.
If you don’t have enough money to buy them something, explain it to them.
Everybody has a budget that they need to stick to. It’s an important part you shouldn’t miss when teaching children about money.
If your child really desperately, insanely needs that amazing and expensive (and probably annoying and forgotten about in a week) toy, let them wait for their birthday. It’s better for your bank balance and better for your child’s future financial literacy.
Let them earn their keep
Pocket money can be a bit of a contentious issue. If a child is a part of the family, many people believe that they should be contributing to the chores. Parents don’t get paid for the unending housework they seem to be lumped with, so why should a child?
A simple solution is to have a basic chore list. These are the jobs that your children do to earn their keep. If they wish to earn money, more chores and pocket money can be negotiated on top of that.
There are, of course, other ways for children to earn money and learn great money habits at the same time. How about suggesting that they run a lemonade stand? Or a garage sale filled with your children’s old and unused toys? Make sure that they are organized and staffed by themselves. We are trying to teach them the value of money earned here.
Any money-making venture that your child can come up with should be encouraged. Who knows, you may end up with a miniature Richard Branson on your hands!
Teaching a child how to look after their money and be responsible with it is one of the most important tools that you can give them before sending them out into the big bad world to fend for themselves. Start teaching children about money now.