Like every parent, you worry about your child's ability to look after themselves when they ultimately fly the nest.
A conundrum you may be faced with is at what age do you start teaching them about financial responsibility?
Here are 4 simple ways to teach your child exactly what they need to know
Practise What You Preach.
Kids are more inclined to practise what you do
a lot more than what you say.
Being thrifty, maintaining good savings habits, reducing debt and cutting frivolous spending are all good financial habits that children should be exposed to from an early age. Some fun money-wise activities you and your children can do together are:
Explain The Difference Between ‘Wants’ And ‘Needs’ Expenditure.
- Keep a savings jar that you both contribute to, and when full go on a shopping spree together!
- Reward your children when they save rather than spend.
- Draw up a spending plan together where you prioritise certain purchases over others.
While this is may be obvious to adults, children do not always understand the need to prioritise between purchasing essential and luxury items. Parents can enforce this rule by taking their children along on shopping trips and ask the children to help fill the trolley.
While they pack the trolley full of their favourite goodies, explain to them the need for essential foods over items like treats and sweets. And then let them pick out their favourite fruits, vegetables and other essentials.
Very young children don’t always understand the finite nature of your money. You can explain and teach them this important rule by giving them the grocery money and allowing them to hand the cash to the cashier at the end of your shopping trip.
Put A Good Allowance Policy Into Place.
Giving your children an allowance is one of the best ways you can teach them to manage their own money. Start when they are young, around age six, with a monthly allowance and continue this throughout their teenage years. Make sure that you remain consistent with any allowance rules, and make as few exceptions as possible.
This will give your child hands on experience of managing their own money, so it is important for the parents not to intervene in the way that the children spend their allowance. Allowing them to make poor spending decisions with their allowance can be turned into a learning opportunity for making better decisions with their money in the future.
Open A Junior Bank Account For Them.
Learning the basic principles of banking is an important part of your child’s financial knowledge. By opening a junior savings account for them you are providing the groundwork to learn about aspects such as bank costs and interest, and how they can use these to grow their savings.
Explain to them the importance of saving for their future over spending their money quickly. Interest is a great way to show the importance of saving in action, and if done throughout their childhood, will also provide them with a decent sum for when they leave the house, get their first job, begin to study, etc.