Children who develop good financial skills from a tender age are likely to be more ready for the financial challenges at adulthood.
In our rapidly changing World, giving your children a good foundation and training them about financial matters is crucial for their personal growth.
Helping your child understand the basics regarding money such as how to budget, spend and save will enable them establish good money habits for life.
The following are a few researched tips of how to go about the lessons for children as young as three years of age:
Save Till You Can Afford it
The ability to delay ones fulfillment could predict how successful one will be as an adult. Children at this age need to learn to understand that if they really desire something, they should wait and save towards buy it.
This is a hard concept for people of all ages especially with the emergence of quick money lenders availing cash under lenient rules.
Financial lessons can never be introduced too early as they set the tone for adult life. Giving in to each and every demand of a toy or a snack does not really help.
It is important to have a talk before going into a toy shop or supermarket, explain why you are there and your budget, if it is possible, give them a budget too, like a 50 shillings budget and allow them to buy anything with it as long as it does not exceed.
Children then quickly learn and understand that going into a shop does not always mean buying everything you want but means working within a budget according to priorities.
Allocation according to priorities enables a child to choose and make decisions on what to keep and what to let go.
“Allocate three jars for this purpose, each labeled according to its task, “Saving,” “Spending” and “Sharing,” says Jayne Pearl, coauthor of Kids, Wealth, and Consequences.
For every time your child receives money, whether for doing chores or from family and friends as presents, divide the money equally among the jars. Have him or her use the spending jar for small purchases, like toys or stickers. Money in the sharing jar can go to tithe, offering or donate to a friend’s cause.
Include Your Child in Financial Decisions at Home
The saving jar should be for more expensive but achievable items. It could be used to contribute to the family’s development whereby probably at the end of the year, the family can sit around and table their savings to agree on where to put the money. The child’s opinion should be heard or seem to be heard so as to encourage a feeling of teamwork in them while training them to invest.
Be open to the idea that they might want to buy a toy. Respect their decision and advice them on the quality of the toy they plan to get till they are able wrap the saving idea around their heads.
Whenever your child adds money to the savings jar, assist him/her count up how much s/he has, explain how much s/he needs to reach the goal, and when s/he will reach it. Make it fun!
“Money is finite and it’s important to make wise choices, because once you spend the money you have, you don’t have more to spend,” states Financial writer, Beth Kobliner.
During shopping, talk to your child on your financial decisions as an adult, questioning whether it’s something you really need and whether it could cost less elsewhere.
Money without money management skills does not grow or last. Share more tips with us at the comments section.