5 things you can do to teach your children about money
Updated: Jun 11, 2020
Warren Buffett bought his first stock when he was eleven years old from the money he earned. Richard Branson credits his sense of entrepreneurship to his spirited mother Eve Branson, who instilled a strong sense of money management in his childhood.
From the famed investors to those around you, the people who are most confident about money are those who have had a strong financial foundation in their childhood. Chances are you probably did not learn personal money management in school. Sadly, children in schools today are not learning it either.
Teaching your kids about money is important for them to build healthy financial habits so that they can fuel to their own dreams.
Here are some of the ways you can start:
Talk about money
Money is a sensitive topic, sometimes even a taboo. Many parents would like to keep their children away from money worries in childhood and avoid the topic. Even if it is well-intentioned, such actions may end up making them nervous around money life long. Talking about it is the first step to being comfortable around money, especially in perceiving its value. Have calm conversations about purchase or income around kids. This will make them aware of money as an essential need for living and may keep them away from the two extreme approaches to money: fear and disregard.
Let them earn it
This is a good way to teach them the value of money. When your kids are too young to earn pocket money, you can start by giving them additional chores at home. Don’t make it too easy by paying for work that they are already supposed to do such as taking care of their things, or their homework. Find chores that will give them a chance to relate money and work. Older kids could spend a summer working at a friendly neighbourhood store.
Establish the idea of saving before spending
Whether it is a bawling toddler at a mall asking for a toy or an adult unable to resist an expensive purchase, knowing when to control spending is a hard behaviour to learn. The value of inculcating it as a habit from childhood is priceless. Use your child’s pocket money or the money earned from their summer jobs as a start to teach them about savings and spending diligently. Teach them to set a part of their money into savings. Encourage their habit by matching their savings with your contribution.
Find out about the cookie jar system that can help you teach them about savings effectively. It could also be a way you can teach them about delayed gratification by using their savings to buy the things they want.
Open a savings account
Saving is a crucial step in learning money management, one of the ways you can formalize this step is to open a savings bank account. Most banks offer the option for a children savings accounts with a variety of features. Some do not have a minimum balance requirement, many offer an ATM card that teenagers can use. Few also offer a chance to use the savings to invest in Recurring Deposits and Insurance. Chose one that works for you and your child and start their money management journey.
Walk the talk
Children never do as they are told but do as you do. As a parent, you have heard it and experienced it as well. It is a chance to re-look at your own relationship with money. Build an environment at home where money matters are discussed freely and let them observe you living out above pointers.
As a quote by Benjamin Franklin rightly goes, “Tell me and I may forget, teach me and I may remember, involve me and I learn“. It is all about involving, indulging and inculcating money values in the right manner so that your children grow up to be empowered adults making confident choices about their finances.
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