The importance of teaching your little ones about money can never be understated. Should you succeed in performing this crucial task, your children will be much more likely to make sound financial decisions in the future.
Teaching children about good financial practice is by no means a straightforward endeavor. If you want to overcome this challenge in an astute, effective, and kid-friendly manner, be sure to heed the following advice.
Here are three things you can do to teach your kids about money:
Make use of a clear saving jar
As a working adult, you will no doubt already be all too aware of the fact that saving money is hard. Really hard. This is an endeavor that requires dedication, determination, and discipline. If you want your kids to handle this all-important task in a highly effective fashion when they reach adulthood, you need to expose them to the idea of saving early on in their lives.
There are many different routes that you can take to teach this crucial lesson, one of the most effective being to make use of a clear saving jar. Using a traditional piggy bank is all good and well, but it doesn’t provide a visual representation of how much money is actually being stored away. A clear jar, on the other hand, does. It allows your children to actively view how much money they are putting away each month; as they see this kitty of cash grow, they will then feel more compelled to add more to the pot going forward.
Showcase ‘opportunity cost’
If you’re serious about raising financially sound kids, you need to expose them to the fact that products and services cost money. By showcasing what is known as ‘opportunity cost,’ you will make it clear to your children that they cannot afford to purchase everything they want. This will force them to make conscious decisions on what they do and do not wish to buy, which in turn will help them to better understand the potential ramifications of making certain investments.
Cultivate a sense of generosity
Educating your children on how to look after their money isn’t the only important task that you face as a parent. If your kids are to grow up to be unselfish and thoughtful adults, it is recommended that you cultivate generosity amongst them from an early age.
When teaching your kids how to be generous with their money, try putting the following advice into practice:
1. Become a charitable role model by actively making an effort to donate to worthwhile charities;
2. Encourage your children to host their very own fundraising events (bake sales, lemonade stands, etc.).
Do you want to provide your children with a head start in the world of personal finance? If so, it’s highly advisable that you heed the above advice. The earlier you teach your kids about money, the more respect they will have for the cash that they earn and, in turn, the more likely they will be to look after their finances when they’re older.