Tips for Raising Money Wise Children
Great tips and exercises for raising money wise children.
Educating your young ones about money and the importance of saving is one of the greatest life foundations a parent can pass down to their children. No parent enjoys seeing their children make the same mistakes as they did when entering adulthood, which is why it’s so important to teach them about finances and healthy spending from a young age.
A supervised monthly allowance is a perfect way to promote the idea that saving is a fundamental part of financial security. If they want something and work hard towards attaining it, not only will they better understand the value of money, they will also have a greater appreciation for that item and focus on taking better care of it.
It’s never too early to start with financial education. Here’s a few age-specific tips to follow when raising money wise children:
Age 3 – 5: Training Stage
- When shopping with the younglings, be sure to verbally discuss your purchase decisions with them. Telling them why you are buying a certain brand over other displays the importance of intelligent spending.
- Use coins when teaching them to count. This will allow them to better associate numbers with physical objects, allowing the learning process to make more sense along the way.
Age 6 – 8: Real World Application
- Buy them their first piggy bank, or better yet, design your own homemade “coin jar” with them. The process of visually seeing the money grow over time will help make the idea of saving feel more practical.
- Discover what they want to spend their money on, starting with something small like a toy or sweet. When the piggy bank fills up, make an effort to go out and buy the item with the money saved. This allows them to see the benefits of saving take shape in the real world.
Age 9 – 11: Encouragement
- Consider developing a simple in-house banking system. If your child wants something but hasn’t saved enough yet, lend them the balance. It’s important that they understand that they’re required to pay you back, emphasising that money borrowing doesn’t equal free money.
- At a later stage you could even add minimal interest on the amounts that you lend. This can help them understand the added costs involved in borrowing.
Age 12 -15: Introduce an Allowance
- By introducing an allowance you increase the responsibility of personal expenses. Have them use their money for entertainment-based activities like watching a movie or buying sweets.
- Transform the allowance into a salary concept at a later stage. This will emphasise the importance of working for your money.
- Assist them in setting up a simple budget, allowing them to set goals along the way.
- Be sure to involve them in family budget discussions which will allow them to understand how the process works in reality.
- Develop long term goals towards saving for expensive items.
Age 16 – 18+: Prepping for Adulthood
- Update their personal budget, adding expenses such as clothing and toiletries.
- Educate them about the importance of maintaining good credit.
- Open a cheque account, teaching them how to handle a debit card.
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It’s important to remember that children often learn more from what you do than from what you say. With this in mind, it’s important to practice what you preach and emphasise healthy spending all year round.
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