Teaching children how to work with money is an incredibly important life lesson. However, it is hard for children to understand the concept of earning and spending money these days since paying with cash is very uncommon and every payment happens through card or mobile apps. They also have direct access to the everyday life of influencers and celebrities on social media, constantly being exposed to uncontrolled spending by well-off people. With Talk Money Week, we want to help your kids learn the right values and give them the knowledge to become financially intelligent.
Start talking about money early
It’s never too early or too late to talk about money. By the age of three kids can understand you pay money to get things. They learn money habits by seeing their parents pay at the grocery shop or in a restaurant. It’s important to try to involve them when this happens; ask them questions, show the receipt and see if they understand the process. Handling money is an important part of gaining confidence around it as well, so give them coins, cards, and notes, or maybe even start off with their first piggy bank.
Financial failures are part of life and even though you might be embarrassed about them, you should tell your children about decisions you regretted in the past. This can range from not saving up for college to investing in the wrong assets. They’ll appreciate your openness and learn a valuable lesson about overspending. If they ever find themselves in a similar situation, they hopefully feel more at ease to come to you for financial advice as well.
Share values, not numbers
It’s all about teaching them concepts like saving, budgeting, paying down debt, rather than giving them full insight into your personal bank details. Important messages to impart to your kids are delayed gratification, want versus need, and the value of work. You could turn this advice into a direct experience by helping them plan a budget for something they really want, look at all the costs in advance, and come up with a plan and timing.
Keep it fun and light
It’s important to be honest, but don’t overshare. Come up with fun games to plan, let them pay the waitress at a restaurant, or do activities that spark a conversation. After all, they’ll learn more about economics in school, so you’re better off teaching them your family values. If you are going through some financial difficulties as a family, resist the urge to talk negatively about it. Simply make it clear there won’t be much room for extras in the coming months or you’ll be eating out less. If you are paying off debt or saving for the future, let the kids join in as you celebrate reaching milestones along the way too!
The ways people choose to spend money are personal and different, it’s important kids realise this from an early age. Money-smart kids are understanding other individuals’ financial situations and spending habits. For further in-depth advance on talking with your kids about money, Talk Money Week released several guides to help you out.
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