If you are given another chance to teach any lesson to your kids, what would it be?
80% of parents wish to educate their kids about money and fear it will be too late for them to do it. Teaching your youngsters about money during the early years can help them to develop good financial skills, and be ready for any money troubles that will definitely occur once they hit adulthood. Aside from that, almost 71% of teens suggest that personal finance should be part of mandatory subjects while in school.
Benefits of Teaching Kids About Money
- It improves their decision-making ability whether to an item they like to purchase is necessary or luxury.
- Learning financial skills at an early age, kids will appreciate the value of money and the importance of having savings and emergency funds.
- There is a possibility to prevent them to suffer the consequences of impulsive buying or spending in the long run.
- This will open their mind that they need to work smarter to be able to financially secure when they get older.
- Providing the kids with positive perspectives and practices about money, this will become normal for them.
- They would know the differences in earning, saving and spending at an early age.
As the parents, here are the effective ways to involve the kids in managing the finances well.
Show your utility bills to them. Frankly speaking, showing your utility bills to your kids will not hurt them, if only you can explain them thoroughly the reason why you have to do it. Take time to inform the kids on how the electricity consumption increases your monthly bills and state examples on how to lessen the fee like turning off the T.V. when not in use, keep the faucet closed when not in use. These examples will be a good practice for them to be thrifty.
Demonstrate wise purchases by asking them to buy grocery with you. Groceries play a huge part in your annual expenses, let your kids handle the list of items you need at home and stick with it. If the kids try to do impulsive buying, tell them the truth, which is the remaining money you have, will be used in paying the utility bills and for their snacks at school.
Point out a branded shampoo with the expensive price at 100ml and 150ml unbranded shampoo that costs less. Between the two choices, you prefer to buy the 150ml unbranded shampoo and tell them you prefer the latter since you can use it longer than the pricey branded shampoo with 100ml.
Discuss and choose limited entertainment option with them. During your first paycheck of the month, gather the kids at the living room and inform them about your estimated budget for entertainment purposes that you can do once a month. This can be watching movies together, eating out at your favorite restaurant, finding new staycation or any activities that the entire family can enjoy.
During the brainstorming with the kids, eradicate immediately the choices that are beyond your estimated budget for entertainment purposes. Then, sort out the suggestions enough for the money you have allotted for it. In this way, kids will learn the value of budgeting, in addition to that, you won’t have any problem with your finances in terms of paying the school fees, utility bills.
Encourage them to be financially responsible. Having smart kids, it’s possible that when they got older, some of them will be entrepreneurs or start-up founders. Encourage them that there’s nothing in this world can stop them from reaching their business or career goals. In fact, discussing the advantages of lending from a reputable licensed moneylender will give them an idea to start their business by requesting a loan.
Recapitulate everything they need to know about the legal lending firm like how fast the loaned cash gets approved and the flexible payment options it offers.
Let them earn money as young as they are. If your kids keep on asking you to buy a new set of toys or PlayStation, help them to have savings through selling shakes during summer, or budgeting their daily school allowance.
Teach them to see the good in saving up money to buy the self-reward item they love to have for themselves.
Create an expenses chart and post it at their room. For each kid, they will have separate expenses chart at their private space.
Remind them to fill up those charts each time they shell out money, and at the end of the month help them to identify which of the expenses they had over a month consume most of their money and prepare to lessen it.
It might be hard for the first time to implement these things, but eventually involving your kids in managing finances will keep them grounded and money wise as they age.