5 Strategies to start teaching your kids about money
1. Give them an allowance:
Giving your kid an allowance is a great way to teach them about budgeting, saving and spending. As your child gets older, you can help them understand the importance of setting goals for their money and how to prioritize where they want to spend it.
Some parents give their children allowance in return for completing household chores, but this could establish a transactional relationship. Instead, try a hybrid-style allowance system: Give kids some cash each week that they can spend however they please—without being tied to specific chores. This is spending money for kids to manage that can be allocated to movie tickets, video game upgrades, Pokémon cards—or that they want to save towards larger purchases.
2. Share your saving &spending habits
Talking to your kids about the way you save and spend money is a great way to teach them what works in the real world. Letting them know how you manage your own finances will help them form their own good habits when it comes to money.
Help your children learn how to set a budget and track their spending by breaking down their weekly allowance into separate envelopes for different categories, like spending money, saving money, and charity. This will help them understand the importance of allocating funds in a way that works best for them.
Say if you are buying household items, invite your children to shop with you and explain how different items can be compared in terms of quality and price. This teaches them how to make smart decisions when it comes to money.
3. Create a savings account for them
Make sure your child has a savings account with their own money. This will help them understand the power of saving and investing, as well as introduce them to the world of banking.
You can start small by setting aside a certain percentage of each allowance or any other income they receive. Piggy bank or an excel sheet, everything works if done consistently. Seeing the impact that time has on their funds will encourage them to save more – be it to save up for a bigger item or to put away for college.
By learning how to save, your child will be able to use the money they have earned to pay their own bills and expenses later on in life. This is an important life skill that can help them become financially independent as adults.
4. Include social responsibility
It is also important to teach your children the value of helping others. One way to do this is by encouraging them to set aside a portion of their allowance or earnings, and donating it to charity or those in need. This will not only help develop a sense of social responsibility but will also encourage more compassionate thinking and behaviour.
5. Make it fun:
Making a game out of saving and spending money can be an interesting way to teach your children how to manage their finances. Ask them to find ways they can save money through coupons or discounts, or have them make a list of items that they want and then create a plan for saving up enough money to buy the item.
You can also encourage your kids to keep track of their spending. Have them use a simple budget sheet or spreadsheet to document where the money is going, and help them create goals for saving money each month. This will teach them how to stay within their budget, as well as the importance of setting long-term financial goals.
Consider Milestone, a financial literacy app
Milestone- an app that teaches kids about financial literacy is here so that parents and children work together as a family to learn a lifeskill that benefits all. It includes fun activities that help children learn the basics of budgeting and saving, such as setting up saving goals and working towards achieving them through chores.