There is no better time to sharpen your child’s wealth management skills than now.
According to a University of Cambridge study, children’s money savings habits are typically set by the age of seven.
Further, as a parent, you have the biggest influence when it comes to your little one’s money habits. Teaching your kids how to save and use money wisely also sets them up for financial success in the future.
Now that you know it’s never too early to teach your child about money, here are five good money habits that they can grasp at a young age.
1. Involve Them When Making a Budget
Do you involve your kid when creating your monthly or weekly budget?
If you don’t, it’s about time you did.
Let your child chip in when you’re creating a shopping list. Also, teach them how to use the shopping list when you go to the store. Explain to them the importance of sticking to a budget and the need to avoid impulse buying.
Moreover, if you have an older child that you give monthly or weekly pocket money, encourage them to budget for every coin.
Once your child understands the importance of budgeting, they’ll be able to monitor their spending and live within their means even in old age.
2. Teach Them to Save
For most of us, our first money management lesson was in the form of a piggy bank.
Similarly, teach your little one to save.
Get them a clear piggy bank, a savings jar, or a coin collector box and watch with them as their money grows. Discuss with them their short-term financial goals and how saving can help them achieve these goals.
Also, let your child know that saving helps them delay instant gratification and achieve financial success. For instance, make your teenager understand that they don’t have to use their money to buy the latest clothes but that they can save for college.
Similarly, model the saving behaviour as children learn best by copying you. Open a savings account for your little one and monitor the savings with them.
3. Provide Them with Opportunities to Earn Money
Children need to understand that money is often a reward for work done. Besides, this is how the real world works.
Provide your kids with opportunities to earn money. For instance, instead of giving them an allowance, you can pay your preschooler a commission for chores done.
Examples of house chores that your child can do around the house for some money include:
- Cleaning their room
- Helping in the garden
- Taking out the trash
- Washing the dishes
- Mowing the grass
Older children can also sell small items to their friends or set up a profitable business. The greatest lesson your child will learn from this is that money isn’t always given but earned.
4. Let Them Learn from Their Money Mistakes
Allowing your child to make money mistakes can help them learn important and lasting financial lessons.
For example, if you believe your teen is going to waste their money buying the latest video game, let them buy it. Once they realise that they wasted their money on a video game that they enjoyed for just a few hours, they’ll learn a lasting lesson on how to make the right spending choices
Further, if you have made money mistakes in the past, let your child know about them and the lessons you learned.
5. Teach Your Teen to Be Content
Children, especially teenagers, often suffer from self-esteem issues because of comparing themselves with others. Besides, in the modern age of social media, it’s very easy for your child to get into the comparison trap.
Teach your teen that there will always be a disparity in wealth. Some people will have more money than others, and that is okay.
Also, let them know the value of money. For instance, the next time your 17-year-old daughter asks you to spend $10,000 on their birthday, ask them to use some of their savings to fund it.
You also need to lead the way when it comes to being content by setting spending limits for yourself. For instance, you can reduce the pair of shoes you buy if you have a shoe addiction. Let your child see you setting limits for yourself, and they’ll most likely model this behaviour.
Practicing gratitude is another great way to teach your child contentment. Teach them to be grateful for what they have. Let them keep a list of the things they’re grateful for. You can also visit an orphanage with some donations and let your child see that not everyone is privileged enough to have the things that they have.
In closing, teaching your kids good money habits will help them learn how to become financially responsible from an early age. Such habits also pave the way for your child’s financial success.
So, go on and start teaching your little one the above five money habits as early as now.