When to get started
It’s never too late or too early to learn the principles of effective money management. Furthermore, if you have young children, it can be really beneficial for them to learn how to manage money well from a young age and hopefully carry these good day practices through as they grow into adulthood. So here are some tips for raising financially literate kids to help them become better prepared for their financial future.
An age-appropriate allowance
Giving your kids an age-appropriate allowance will, of course, depend on your budget, amongst other things such as the age of your child, their maturity level, and their readiness to take on a subject as serious as money management. However, once you’ve decided on an age-appropriate allowance, you should endeavor to stick to this amount while your child gets used to purchasing items that will stay within their budget. Again, it’s really about teaching them not to over- exceed their allocated amount and to make the most of what they’ve been given, i.e. knowing how to spot discounts deals, and value-for-money offers.
When no means no
When it comes to money management, it’s essential to teach kids that buying everything they want on a whim is simply not possible. Sure, a spoil every now and again is ok, but so is learning the value of patience and saving up for that special something they really and truly want.
Learning the value of savings
Indeed, one of the most critical components of money management has to be learning the value of saving money. Opening a savings account for your child is one way to emphasize this vital money management principle, as is showing them how their money can grow in a savings account through interest accruals.
Make a game of it
Suppose you’re looking for a way to put these principles into practice. In that case, there are many games that you can buy that can teach your child how to work with numbers which in turn can help them to translate this knowledge practically when it comes to their pocket money. Furthermore, games can make the topic of money management more lighthearted and fun as well as more child-friendly which is essential especially for young children whose attention spans are often very limited.
Providing them with opportunities to work for their money
Earning money usually requires hard work. But it can also mean working more smartly. Providing your children with the opportunity to make money by completing tasks or chores will help instill the value of money and can further help to emphasize the fact that hard work often comes with great rewards.
Teach them related financial, practical skills
Again, the condition of our finances can have a significant effect on our lives. So teaching them how to draw up a basic budget is valuable information that can assist them in managing their allowance better, as well as give them the basic tools for better money management as they advance into adulthood.
What about teaching them the truth about refinancing your mortgage, for example? This is valuable information to know should they need to do this at some point in their future and can help broaden their money management knowledge in a different area as well.
A lifelong learning curve
In conclusion, teaching kids about the principles of successful money management when they are young will give them the tools to navigate life when it comes to their finances more wisely and will give them the practical skills that will hopefully carry them well into adulthood and enable them to become better stewards of money ultimately.
This article, courtesy of Perpetual Resources, is one of several great pieces of content you can find on the perpetualresources.com blog.
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