How well are you financially literate? Who has had the most meaningful influence on your development regarding money?
Parents must instill in their children the financial habits that will lead them to success and future high pay stub income.
It does not mean that all of your communication should be about money, but it should have an essential place in your child’s upbringing.
The earlier you start talking about money, the better your child will learn the lesson.
And if you do it step by step – introducing age-appropriate habits about good money over time – your children will have a solid financial foundation when they become adults.
So what you can do to teach your children about proper money behavior.
1. Use games.
As we said, the earlier you start teaching financial literacy, the better results you can achieve. If your child is very young, a game is the best and most effective way to teach them about money, its meaning, and its role in life. For example, you can find many versions of board games on the Internet where players have to save and spend money, generate income, create businesses, and otherwise use income. Typically, these games are available from an age when the child has learned to count.
In addition, you can arrange a home for this quest, where a child will earn money by doing various tasks and then spend it on buying devices that he will need to pass this quest.
So, in-game form, the children will understand that it is necessary to make efforts to get income, and the more it is, the more purchases they will be able to afford.
During the game, explain to the children that money is hard to earn and easy to spend. However, it is a valuable and universal resource that will allow them to meet all their wants and needs.
2. Set priorities.
Since we’ve started discussing wants and needs, please explain their differences to your child. For example, some things are necessary for everyday sustenance; without them, life is impossible. These include food, clothing, shelter, medicine, and hygiene products. These are a person’s primary needs, and their satisfaction is the main task he must pursue when earning money. When basic needs are properly and fully met, a person has other desires, which can be satisfied with large sums in the pay stub. It is what one should strive for. So, there are desires to travel, visit restaurants and cafes, dress in brand boutiques, use expensive perfumes and jewelry, and travel. Since without all of the above, a person can live, this is an optional desire. Of course, for a complete and exciting life, you should strive to realize as many of your desires as possible. The child should also understand that. Show this with an example of toys. You can offer him to play all day with the most simple toy or provide a whole bag of toys to choose from. Which situation do you think he will like better? It is likewise in the matter of money. He should understand it after your lesson.
3. Show him how to budget.
Of course, it’s doubtful that a child of seven can figure out how to allocate his pocket money for an entire week or month. But a teenager is already prepared for this task. You can give your child some money and ask him to allocate it to grocery shopping for the whole month. Offer to make grocery lists. That way, he will see that he cannot meet all his wants with the money he has. It leads to a future desire to earn more to be able to buy himself and his family whatever he wants.
4. Talk about goals.
Of course, just desiring to develop money making ideas without having a plan will not lead to the right results. How can you show your child the importance of financial goals for effective earning? Find out what your child wants most today. It can be any significant purchase, such as a big toy, a car for a teenager, or a trip during the vacation. Help them decide how much money they need and offer opportunities to earn it, such as helping you around the house.
5. Talk about the importance of costs.
Help your child understand where and how quickly money goes. The best way to demonstrate this is with a translucent piggy bank instead of a regular one. With it, your teenager can observe how money accumulates and how quickly cash is spent to satisfy passing desires.
He should know the value of every item he buys: a toy, junk food, a new gadget.
Of course, explain to your child that expenses are essential to planning. You should approach this issue thoughtfully and reasonably. He shouldn’t spend money on something that he won’t need in a few minutes and won’t be used.
You can also make it a habit to write down his expenses daily, down to the smallest detail. Then it will be convenient to show him what useless things he spends money on every day. This advice is critical, as you understand, concerning teenagers.
6. Teach to save money.
Even a very young child already understands how nice it is to have cash at all times. It means that he will already be able to set at least short-term goals and save money to achieve them.
Saving is the best financial habit because it helps prioritize future expenses and is a prerequisite for achieving goals quickly.
To ensure that your child can’t spend the money saved on impulse purchases, open a savings account at the bank. That way, he can’t access it quickly, and his costs will become more deliberate.
7. Show how to invest.
Of course, saving isn’t the only condition for a successful financial future. Your kid has to make money. Tell him about investing if your child can’t work because of his age or lack of time. It is a great way to make passive income. You can also use the various online simulators available on the Internet.
If you want your children to learn how to earn, spend, and save money properly, they need to see you do it too. Set the right example. If your monthly or bi weekly pay stub doesn’t meet your needs, your children will unlikely to achieve much financial success. Teaching children about finances is a long process. But if you make an effort, you can guide them to good financial habits that will help them in the future.