Kids will learn about money in various settings as they grow, but financial literacy starts at home. As parents, it's your responsibility to help your kids understand the value money, if you want them to make sound financial choices when they get older. It’s not a walk in the park, but it’s not too difficult either.
Help Them Understand The Value of Money
Modern parents like you should consider yourselves lucky because there are various resources online to assist and guide you. You can easily search for materials, read articles, or download allowance chart for kids on the Internet.
To make things even more convenient for you, we came up with tips to help you make your children understand what money is worth.
Explain to them how money works
To your three-year-old, money is nothing but a piece of paper that rolls out of the ATM and gets them toys and candies. And you may think that's okay because they'll learn about it later in life, but it’s not. The thing is, if you want to raise financially responsible children, you need to make them understand the real deal behind those “papers” and how it works in the real world. Once they learn to appreciate the effort that it takes to earn money, it will be easier for them to grasp why they have to be wise with their spending.
Give them something to spend
Talking to your kids about the importance of using their money wisely is just the start; they need to spend some themselves to fully get the idea. After all, experience is the best teacher, right?
Set up a regular allowance for your children and let them use it as they please. If they want to blow it all on a single purchase, point out the trade-offs to that decision but let them have the final say. Experiencing the consequences of reckless spending first hand should make them think twice before paying for something the next time.
Let them earn some too
Many households have this system where money becomes the reward after kids do their share of responsibilities in the chore chart – and yes, it works. But while money can be a great motivating factor, your kids also have to realize that they are expected to help out around the house because they’re part of the family and not because they’re paid to do it.
If you wish to teach them the value of working for the things they want, you can always offer them ways to earn.
At some point, your kids will ask you to buy a toy, a book, a new video game, etc. – these are excellent opportunities to make them work for it. Apart from their routine chores, make a list of age-appropriate tasks that your kids can do to make more money. While children’s allowance shouldn’t be tied to chores, it’s still important for kids to learn that money is something they need to work for.
Encourage them to save
For decades, parents have been teaching their kids how to save money with a piggy bank. But as effective as that has been for the previous generations, it’s time for a more modern approach.
Your kids have witnessed you use your credit card or take money out from a machine all the time. Don't you think they should have one too? Some banks and institutions let children have their own accounts. Opening one for your kids is a great way to start their financial education, especially on how to grow their money.
As cashless transactions become increasingly popular, a personal cash card or debit card is an effective way to make your kids realize that spending on plastic is essentially the same as spending cash. Giving them this kind of responsibility is a significant first step towards financial literacy.