Having a financially educated family means including the kids in financial decisions from an early age. However, training a kid to be financially intelligent goes beyond the home. It means my kids will help create a community with better financial decision-making skills. This is a skill we often forget, yet many people end up in jail because of a life skill problem that started with poor financial planning.
Kids take time to understand the environment. Therefore’ I ought to be more tactful when I’m discussing money skills. Here are some tips I’ve found useful.
Money is a product and service exchange tool, and our kids need to understand what this means before entrusting them with money. Luckily, kids internalize what we do and how grown-ups interact. The best way to bring my child into money conversations is to do it in real-time. When I go to the supermarket, I make them understand what is happening, like how much I am spending and why I have to pay the cashier before I leave.
Using the same superstore example from above, we know how kids get when they want a pack of snacks, yet we were not planning on buying them. The situation gives me a perfect opportunity to teach my kids the difference between having a want and a need, especially where money is the central focus. Instead of refusing to buy the snacks or giving in, I find a relatively private space and break down why it is important to prioritize needs over wants.
As my kids’ parent, my job is to prepare them for the external world, and what better way than to use examples from home? I do not encourage us to cheat kids into taking on chores, but kids will be more responsive where there is a tangible reward. I could allow some allowance for helping out in the house as an opportunity for my kids to learn how to work and get paid.
I will not always control how my kids spend their money, but I can encourage them to spend it wisely. An excellent way is rewarding the one who buys reasonable supplies. I could opt to add more of what they bought if it is a vital necessity or increase their allowance the next time. This way, everyone will be trying to do their best to earn more.
We do not earn all money to spend it. Kids need to understand this as well. To teach this, I provide them with saving, spending, and sharing jars to distribute their earnings. This way, my kids also learn budgeting from a young age.
Another way to encourage saving is by letting my kids buy their toys or other items they want but can’t wait to have. For example, if my kid wants a new bike, I’ll encourage them to use their allowance to save a certain percentage, and then I’ll top up the rest. This way, I also teach the importance of financial partnering.
It is wrong to expect kids to get it right from the beginning, although this is a pleasing notion. As an adult, I should manage my expectations and try not to push my kids too fast into a saving culture. I should also find a way to balance helping out and letting my fears keep them from learning. The more I leave room for mistakes, the more I leave room for learning. This way, I can be sure that whatever happens, at least my kids will be money mature.