When it comes to giving your kids a good foundation and education about money matters, it seems to be a critical challenge which is anyway important for their personal development. If kids develop good financial skills from an early age they'll be ready for the financial challenges of adulthood.
A wise learning habit can have a profound impact on your child’s everyday life. But, if you think that you can teach them everything very quickly, then you might be wrong. This is because, all the learning depends upon their ages and their learning capacity. Therefore, you should introduce them to the financial world in simple ways according to their ages.
Ages 2 and 3
Although giving your kids a piggy bank at this age is a great idea but it doesn’t give them any visual learning about money. It is important to teach them the difference between coins and how to count them before putting it into the jar. Talk to them about how much they are working on it and make a big deal about it by telling them the value of money.
Ages 4 and 5
While going to the supermarket to buy some toys for them, tell them the cost of that toy and help them grab some money out of their piggy bank. This will help them to learn how to physically handle the money to the cashier. It's an easy and fun way to teach them a variety of skills and once they understand this concept, they can easily learn it.
Ages 6 to 8
At this age, your kids should be able to weigh decisions and realize that each decision has a consequence. The best way to teach kids to start managing money is to give them some and teach them the basics of earning, spending, and saving. Explain that you work to make money, and the bank is just a place that keeps it safe.
Ages 9 to 12
In order to help them understand that money is earned, don’t just give it to them. Pay them commissions based on chores they do around the house like taking out the trash, cleaning their room, or mowing the grass. You can also help your child open a savings account and encourage him to do regular deposits by making regular trips to the bank. As the balance grows, you can discuss the concept of interest and how the bank pays people back for saving their money. Many banks have children's accounts that offer no-fee and no-minimum-balance accounts.
Ages 13 to 15
You can help your children open a small business during their summer vacations like lemonade stands in your neighbourhoods. The adventure of starting a small business is a great financial and confidence-building lesson for kids. Children learn how to set and achieve goals, understand profit and price, and further develop basic math skills.
Ages 16 and above
By the time your kid is a teenager and they have plenty of free-time, fall break, summer break, winter break, spring break. Help your child to pick-up some charitable organizations that interest him. And if your teen needs money, then help them find a job.
Teach your kids about your Budget
Involving your kids in discussions about your family budget is another way you can talk to your children about money. This helps give them the big picture about costs and spending. Before you go shopping, create a budget. Outline what you're going to buy, by making a list of things required, what stores you're going to, and the price range for each item. With this your kid will learn that planning purchases before you buy is a routine.
You can also explain them the cost of bills to be paid for your house such as the bills of electricity and internet connection. This will help create a connection between time spent at work and money, as well as the fact that electricity and the internet cost your family money. It might also make them think twice about leaving lights and appliances on.
And, most importantly parents need to educate children about the dangers of overspending, borrowing too much, and paying high interest.
