Money Tips Every Children Should Learn From Their Parents
Teenages are a pivotal time of life. They say that you can make or break your life by the decisions taken during this time. When dealing with teenage kids and trying to make them understand some of the more complex realities of life. It is very important for parents and elders to use a tone with which the kids can relate.
Find a Relatable Way to Connect.
The best way to teach teenagers anything is by connecting with them. Many parents have a naturally strong connection with their children but for most parents, connecting with their teenage kids can be difficult because of the generation gap.
Thus the best way is to ideally spend time with your kids to develop that bond but when it comes to actually teach them, then kids learn best through stories and examples. So if you want to teach your kids about personal financial management. Then you cannot say that personal financial management has four pillars which are budgeting, saving, spending and investment.
No, this is not the way to do it because the children will not be able to relate or understand. The best way to go about teaching this to children is by using stories and personal experiences. Turn this into an activity or a game.
Show them that the decisions they make today will most likely impact their life in the future. For example, if your parents taught you about money when you were young and you have followed his advice over the years, surely you’ll be financially sound when you are older.
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Use Personal Stories
I grew up in a household where my parents taught us that saving money is one of our responsibilities. So when I was a high school student, my parents became very strict about saving money. They started limiting my spending by having me get cash first, and they refused to buy anything even if they felt we needed it.
They made sure that I was aware of the importance of saving. So, at the end of the year, I would end up with more money in my piggy bank than what I had spent. With this experience, I grew up believing that saving is a must.
Teach your kids that saving money doesn’t mean that you have to give up on the most expensive items. It could mean that you can only buy that item in the future when you have saved more money so that in the event you need to buy it, you have got enough money left over after buying it.
Teaching personal financial management basics to children is not difficult once you can connect with your child and figure out what makes them interested in learning. You simply need to develop regular exercises, activities and games that teach them about the importance of saving, about planning their expenses according to their income and about investing the savings for the future.
The pocket money system is a very easy way to impart these lessons. This may sound funny but consider yourself an employer and your kids an employee. The pocket money is the wage that they earn by being good.
You can offer them temporary bonuses for doing extra chores. This will teach them that everything comes at a cost and that there are no free lunches. You can also set up the annual rise in pocket money and tell this to them beforehand so that they can get into the habit of planning their expenditures based on their pocket money.
Of course, this does not mean that you end up making them pay rent for living with you. But the aim is to teach the kids important lessons about financial planning. Remember that you do not need to overly focus on financial terms.
The terms are not important. It is the lesson that is important.
The Money Secret
We know that as parents we need to teach our kids about personal financial management. We also know that the best way to teach them is through stories and activities.
But what is the big secret that can make them really grasp the true understanding? The big secret is more like an open secret. The secret is to make it a habit. You have to formulate the activities and exercises for your children, over a period of time, in such a manner that your children end up having budgeting, saving, spending and investment as their basic financial habits.
This is a tried and tested method. If you can successfully turn this into a habit then you will never have to worry about the financial well being of your children again.
What happens is that when parents do not teach good financial habits to children, as a direct result the children end up adopting bad financial habits. There are either good financial habits or bad financial habits, there is no in-between.
Imagine a child growing up without any concept of budgeting. They live this way for their first 18 years and then when they become adults, all of a sudden they are required to manage their own finances. They end up spending without any idea of budgeting or saving and then end up with debt. They will eventually realize that they need to let go of this bad financial habit but by then it will already be too late.
Children with good financial habits however will not make such mistakes when they grow up because personal financial management will be a part of their nature. Parents should focus on making sure that their children understand the ethics of using money. Money is never the goal, it is simply the means to reach your goals in life. If the children understand this, they are less likely to make financial blunders later in life.
Australia Unwrapped provides only general and not personalized financial advice and in no way has taken your circumstances into account. Investments go up and down; any questions, talk to a financial advisor. This blog is opinion only, and in no way should investment decisions be based on this information.
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