It’s never too late to start being financially savvy, and in this case, it’s never too early. Being financially savvy – from budgeting to saving – is a skill that one can learn at any stage of life.
Learning the right financial fundamentals early on can make it easier to succeed when it comes to finances in the future. In this post, we share how parents can teach their children to become financially savvy and learn how to manage money.
Teach the financial fundamentals early on
Once your children know how to count, start to explain some of the fundamentals of money and financial management to them. Show them how to add up coins and notes, where and how money is used and what you can buy with different amounts of money.
Keep your explanations and examples simple to ensure your children understand. Start with putting coins into a piggy bank and adding them up at the end of every month. When they get older, show your children the different types of purchase you can make with cash or a debit card.
Make saving money enjoyable
Parents know all about saving for their children’s future – whether it’s for school or university, or their first car. Whilesaving moneymay not always be an easy habit to get into, it is an important skill to learn throughout life and learning this skill from early on can make a huge financial difference later in life.
Help your children get in the habit of saving money by making it enjoyable. Give them a savings jar to deposit coins or notes into, reward them with something positive whenever they do save and help them set a goal that they can save towards – perhaps a new toy or a trip to the treat shop! These are just some of many ideas you can use to make saving money enjoyable for your children.
Help them earn money
Unfortunately, money does not grow on trees and you’ll need to let your children know where money comes from and how they can earn it.
While giving your children an allowance so they can start to make their own financial decisions is beneficial, consider getting your children to do certain chores around the house to earn their allowance. This will show your children the difference between money that is earned (by doing chores or tasks) and money that is received (like their grandparent giving them money on their birthday). This also provides you with an opportunity to teach your children ‘negotiation skills’ and that the more tasks they are willing to do, the more money they can earn.
Teach them to make smart spending choices
Another habit to instill in your children when it comes to money iscreating a budgetand learning to stick to it. It’s easy for children to constantly ask for money – whether it’s for lunch, the school tuck shop, buying data for their cell phone or when going out with friends. However, once they’ve started to earn their own money, or are getting an allowance, let them use and manage their money, and ultimately learn how to make smart choices on what to spend their money on.
You can also teach your children that spending money on the things they want may cost them when it’s time to spend money on the things they need. Buying lunch at the school tuckshop everyday may be what they want but could mean having no money when it’s time to replace essential school supplies like pens and notepads. In essence, being financially savvy is about the smart choices you make, including how you choose to spend money.
Teaching your children about finances is not an overnight process and it will naturally take time for them to form the right financial habits. As long as you put in the consistent effort to teach financial wellness, your children will form those habits that will benefit them well into the future.
Read this post onHow to Save Money for Big Financial Goalsand use the 3 simple ideas as a resource for teaching your children on becoming financially savvy.
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