From the stage of saving in a piggy bank to sending a child off to college with a credit card, helping a child learn habits around managing money can take a lot of work and wisdom.
Preparing children to be financially responsible at an early stage will help them cope with challenges like resisting instinct buys, planning a budget, and setting spending limits. Making sure that your child has a proper understanding of finances and wealth creation can help them have a secure future in adulthood.
Children’s behavior towards valuing their own money in the future is directly shaped based on their family attitudes toward spending and saving and parents’ financial habits. Parents must understand how their habits will influence their children and that they need to model the behavior they want their children to adopt. It is essential to help the child understand that money is earned from work and doesn’t simply grow on trees.
There are some of the approaches you can reflect upon:
• shh…Don’t talk money in front of children
When you don’t talk about money in your household because you don’t think it’s important that children need to be involved, you’re coding your children not to know the real definition of money. You restrict the opportunity for learning valuable money lessons early on. Avoiding money discussion with children leaves them in the question mark when it comes to understanding what money means, how to get it, and the right ways to manage it.
• Money is earned :
It’s necessary to make children understand that to get the money we need to work. Money isn’t easily available. Children can then set a saving goal and work towards achieving it. It teaches them about making real-world opportunity cost decisions instead of giving in to instant gratification.
• Financial literacy is a must at every age group:
Many parents don’t let their children gain experience managing money by simply skipping money talks. What I suggest, if your child wants a new toy or gadget, ask them,” How could you earn the money to buy it? Let them get creative .”
As parents, we want to provide the best world for our children, but there must be a balance in our approach, or otherwise, they will grow up with impracticable expectations that they should be able to afford whatever they desire. It is OK to tell your kids that you cannot afford something and that you need to save up for a particular purchase.
It is necessary to teach children the difference between ‘needs and wants’ ― things like house and healthy food versus new toys and candy.
But for all that first you as parents need to improve your own habits and skills around financial management. Because if you are continually swiping a credit card for everything, then it would really be difficult for your child to understand the difference between needs and wants or even the value of saving.
Although at times we can’t be harsh and strict in crushing our child’s affordable innocent desires, at the same time, I feel it’s necessary to make them understand the value of money and the difference between need & desireF.