Whether you like it or not, you have to discuss money matters with your children. If you’re thinking about saving that conversation for later when they’re nearing adulthood, then know that it might already be a bit too late by then.
Then again, in a world, as connected as this one through the Internet, your child may already know a bit about money. Still, they will need your guidance. With your help, your child should have a financial awareness that will come in handy as they go through their own lives.
Never Too Early to Talk About Money
Parents tend to hesitate to bring up money matters to their children for many reasons. However, you’d be doing them a huge favor if they have an idea of how the family is doing financially, among other things. Knowing how money works and how to manage it can help instill in them the financial knowledge and the sense of responsibility that will serve them well when they grow up and lead independent lives.
So how do you go about discussing money matters with your kids?
Sure, investing for kids is now a thing, but if you’re talking to a 4-year-old toddler, stocks and bonds, as well as stock market bank holidays, might be a bit out of your child’s comfort zone. Reserve that chat for when your child becomes older, preferably in his or her teens.
For very young kids, start by talking about the concept of money and that it buys food, clothes, and everything your family needs. Older kids, on the other hand, will appreciate learning about bank accounts, what credit score is considered good, and how credit works, among other things.
How Money is Earned
Teaching children how people make money is probably one of the most important financial lessons parents could ever tell their kids. Instill in them the idea that a person has to work hard and smart to earn money and get to buy whatever he or she needs or wants. The lesson that we all need to work hard for money is one that your children will carry with them into adulthood.
Tell and Show
It really helps when you tell your kids about money, but it would be even better if you actually show them how it’s done. One good example is setting a budget for shopping, then showing them why it’s essential to stick to it. It would also be great if you can teach them not to dump into the trash bin any of their belongings that sustain minor damage that can still be fixed.
Money management examples that are easy to follow will go a long way in making your children aware of the financial norms and expectations in the family.
The Importance of Saving Up
Any talk about money matters always comes with the concept of saving up. Impress upon them how essential it is that they set money aside for future use. To help them practice, a piggy bank for the younger ones and a personal savings account for the older kids should be good places to start.
Of course, they’re going to need money to save, so use this opportunity to tell them how they can earn their own money. It could come in the form of a reward for achievements at school, or compensation for doing chores around the house. When they’re old enough, you can also motivate them to get paying jobs.
Regular Money Talk
You’re not doing your children any favors if you talk about money with your kids only once. As much as possible, work finance-related stuff into your daily activities. When you’re shopping for groceries, for example, get them involved in the buying decisions. Tell them the pros and cons of, say, a particular type of breakfast cereal, then have your child choose which one to buy.
The best time to talk about money management with your children is now. Don’t wait until the influence of somebody else, like the celebrities they idolize whose spending habits tend to be extravagant, get to them first. The best teacher when it comes to money management is you, and you better right away.