Quick And Easy Methods To Teach Your Kids About Money

Quick And Easy Methods To Teach Your Kids About Money

The need to teach our kids about money is a no brainer. They need to learn all about saving, budgeting, and investing in the future at a young age to ensure that they have enough financial literacy to live a long and happy life. The question is: How do we go about teaching our kids effective money lessons?

If you don’t teach your kids about money, somebody else will eventually. And there’s a good chance that they might be teaching your kids all the wrong lessons! Here is how you can give your kids a headstart in their financial journey.

Teaching preschoolers and kindergartners

This might seem a little too early for children to learn about money, but if they can count, then they should get as much of a headstart as possible. Just make sure to keep the lessons simple so that it doesn’t fly over their heads.

  1. Use a clear jar

Rather than giving your child a fancy cartoon money box, use a clear jar instead. This way, you can show how their savings can grow over time. Yesterday, they had a single ringgit. Today, they have two ringgit! Talk through how when you save money, your money grows, and be sure to make a big deal about it when their money grows.

  1. Use yourself as an example

Young children learn fast; and since parents will be with them very often, kids will often imitate what they do. They will notice every time you slap down your plastic cards or argue about money. Set a healthy example for them to follow as they get older.

  1. Show them that stuff costs money

Young kids have no experience with how the world works. You will have to do more than just say that something is too expensive. Show them how money decreases as you take it out from their jar. When paying for something, give the money to your kids and have them hand it over to the cashier. Experiencing the lesson in person will go a long way in helping them develop.

Teaching primary schoolers

At this point in time, your kids should have a much better understanding of how money works. As such, your lessons can start getting a little more complicated.

 

  1. Explain opportunity cost

Opportunity cost is what you lose by buying something. It is the core driving force of decision making. At this age, kids should learn to weigh decisions and understand the possible outcomes. Help them understand how far their cash can take them by comparing the cost of one item with another.

  1. Reward work

Don’t just give your kids an allowance. Instead, pay them commissions based on the chores they do around the house. Something as little as taking out the trash, washing their own dishes to cleaning their own room can be rewarded with a little pocket money. This helps to teach them that money is earned, not given.

  1. Avoid impulse buying

Kids will cry and beg to get what they want. Do not give in to them. Children are the masters of the impulse buy, and will likely even want you to buy them something they don’t really want. Instead of buying things for them, tell your children to buy it for themselves using their hard-earned chore money. 

Teaching teenagers about money

The teen years are when children are the most rebellious. However, they do possess a much greater understanding and grasp over the concept of money. Now it is time to instill a greater sense of responsibility within them.

  1. Let them be responsible for their own bank account

As a teen, your kids are now old enough to have their own bank account. No need for super complex bank accounts, a simple one savings account will do wonders in taking their money management skills to the next level. Having them manage their own account can also help them prepare for managing a larger account in the future.

  1. Get them to save for college

Many parents tend to pay for their childrens’ college tuition fees in full. What better way to teach them about the value of saving money than to make them contribute to their own education fund as well! Encourage them to save a portion of their income, whether it is from an allowance or part-time job, so that they can add to their college savings.

  1. Teach them the danger of credit cards

As soon as teens hit college, they are going to get bombarded with credit card offers. While not inherently bad, reckless use of credit cards is a quick way to get yourself saddled in debt. If you haven’t taught them why debt is a bad idea, they’ll become yet another credit card victim. Teach them about the dangers early on to avoid a financial crisis.

  1. Get them on a budget

Many university bound teens may end up living alone. This means that they will be fully responsible for their own finances for the first time. Now is the time to get your teen in the habit of budgeting their income, no matter how much they make. 

If you need help with creating a budget, you can check out this article on the best budgeting apps to use.

  1. Teach them about the miracles of compounding interest

Lessons about investments might fly over your teen’s head, but it is worth beating this lesson into their skull as it will not only help them budget correctly, but also help them to plan for their future to and past retirement. Introduce your teen to the concept of compounding growth early and they will be way ahead of the game once they enter the professional world.

If you are unsure how compounding helps your money grow. This article explains how compounding interest grows over time.

Teaching your children about money at any age and stage of the game will take time and attention on your part. And it definitely will not be an easy task. But if you want your children to manage their money responsibly, taking the time now will be worth it. 

 

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