Money-management is the most important and challenging life-skill any individual can have. According to Robert Kiyosaki, “It’s not how much money you make, but how much money you keep.”
We see people who are unable to maintain their finances and end up with a pile of debt with no escape. As kids become adults, they may splurge their first month’s pay on a dress or a favorite cartoon series character which they always longed for and sometimes they spend more than can afford thanks to credit cards. It becomes very crucial to induct them into making money-wise decisions to safeguard their future at a young age when they are kids.
As parents, it becomes our responsibility to teach them smart money habits so they can face the real world effortlessly. But remember, practice what you preach, because, in order to raise wise money-makers, it is vital to be one. Inducting them can be a herculean task, but with the steps mentioned below, it will be a cakewalk.
5 Ways to Teach Kids to be Money-Wise
- A Trip to the Grocery Shop– The best place to teach a kid about money is a grocery store as it is filled with essentials and temptations. Taking a list along helps them in understanding the importance of planning. Asking them to come up with a list can make them understand the value of prioritizing and select what is needed and the feasibility of products.
- Inculcate in Kids Saving Habits– Teach them to save at an early age of their childhood. Kids enjoy imitating their parents and acting like adults, so parents should be positive role-models and initiate them into the process of saving so that they can reap the benefits when they grow up.
- Let Kids Learn from Mistakes– It is important that they understand that money doesn’t grow on trees and it takes handwork to make money. While at a store, give your kids a little money to spend and ensure that you don’t give them more than that. They need to understand that even if they are unhappy with their buy, it cannot be redone and the next time they need to be wiser with their spending.
- Let Kids Handle an Income- It is vital for them to understand that based on an income, their parents are able to decide what they can afford and what they can’t. While they are watching Rat a Tat or Cat & Keet, try to persuade them to do extra chores, for which they would receive an allowance; this will help them understand the value of money in regard to the time and effort put in. Once they start receiving their paychecks, they will have a better idea of spending.
- Help them with Impulses– Once they start receiving allowances, they will be eager to spend it, help them in making saving goals like buying a jokes book or a game. Create a chart where they can track the price of the product and the money they have. If they can’t wait and buy something else instead, let them but don’t give them money later for buying their goal. They need to understand that there are consequences to their decisions. Try distracting them with other alternatives like reading the books they have or watching their favorite animated series online.
The main aim to start early with your kids so that when they become adults, they would be financially independent. But remember to practice what you preach because kids learn from their parent’s spending habits. Make it a fun and entertaining game with them. It can be a family activity where everyone contributes and learns to be money-wise!