Given how important financial management is to success, it’s surprising that schools don’t teach enough about earning and spending money, the right way.
This often overlooked skill is so important that it could spell the difference between your children having a comfortable future and living from paycheck to paycheck.
Here are 7 tips to help you teach kids about money:
Use Clear Jars
Unlike piggy banks, clear jars give a transparent representation of your kids’ saving progress. It’s crucial for them to see the money growing as it keeps them going. And as a parent, it’s your job to make a big deal out of it.
Fun activity: Prepare 3 clear jars and label each respectively as, “Saving, Spending and Sharing”
The breakdown of how much your child should put in each jar is really up to them. But, experts say that 50% for spending, 40% for saving and 10% for sharing is ideal.
Cool tip: You can paste a picture of the thing that your kid is saving for on the spending jar for added motivation.
Set a Good Example
As role models, it’s important to set a good example. Walk the talk and practice what you preach. If you’re telling them to save money but you spend too much on unnecessary things, then you’re just stirring confusion. Take note that those little eyes are watching you and your child is likely developing habits based on your behavior.
Take the Initiative
Actions speak volumes. It’s easy to say that an action figure costs 500 bucks. Make them experience the transaction by allowing them to save for their toys. When their money jar is full, let them decide if they want to spend their money on the toy or if they want to keep saving.
If they decide to go through with buying a toy, convert their coins into bills and let them pay for their toy themselves. This simple action will give them a clearer view and understanding how financial transactions work.
Differentiate Needs Over Wants
Don’t always give in to your kids’ whims because doing that might give the impression that it’s OK to buy whatever they want. Better yet, show and explain to them the difference of needs and wants. Start small and be creative in your approach! Make play sessions dedicated to proving this point.
Go with your child to the bank and open a savings account once the saving jar is full. Explain to them the importance of keeping their money secure and how their money grows when it’s placed in the bank. This is a good starting point in explaining the importance of saving money and investing.
Turn Them Into Motivated Workers
After teaching them the value of managing money, reinforce this point by showing them the difficulty of earning money. You can do this with a chore-reward scheme where you give them some cash whenever they do chores properly. If they don’t do their chores properly, then don’t give them the full amount.
Make. Them. Earn. It.
Track Their Saving and Spending
One of the ways to teach kids about money is by teaching them to record what they save and how they spend the money. Give them a notebook or drawing pad where they can track their daily, weekly and monthly savings goals. Try to give them an incentive if they meet a certain milestone: a bonus toy, some extra cash or a trip to the mall. Again, be creative!
Teaching kids about money is a life-long process. No matter how much you prepare them for the future, experience is still the best teacher. They will make mistakes, and that’s fine. But make sure to develop these habits early so they can avoid as many financial landmines as possible.
Written by Kib Sia, Security Bank