Shopping for simply anything has been a relaxing activity for me. Yes, it is not practical. And yes, I need to have a lot of money.
But since I was young, practical spending has not rang a bell in my head. That is one reason I landed in a hard debt in my early 20s. I was not one who knew how to manage their money well. If only I knew….
I learned my lesson in money the arduous way, so I wouldn’t want my child to suffer the same fate. Helping our kids deal with money in a smart way can spare them most of the consequences.
Why Is It Important to Teach Your Kids Money Management Skills
Money is important in our everyday life. However, it can also be a source of temptation or a tool to ruin our lives. If we know how to manage our money properly, we will end up enjoying the benefits of having enough and being able to feel content.
Teaching children the value of money will expand their knowledge of how the world works. It will enable them to think critically and practically while at the same time, practicing their minds to organize their needs, wants, and goals.
Knowing how to handle money correctly will help them avoid monetary consequences. They can avoid unnecessary debt while being able to control good debts.
Effective and Smart Ways to Let Our Kids Learn How to Handle and Manage Money Right
Let’s find out how you can teach your children money management skills in these methods below:
Tip #1 – Start Small
Let your kids learn about money through their allowance. Remember, every small effort counts. Even if they only manage to save a few pennies, the character and discipline they build are bigger.
Tip #2 – Allow Them to Understand that Things Costs Money
Not everything is handed to them for free, especially when they grow up into adulthood. Let them know that the things they have or the things you buy for them are paid. It will make them understand the value of work.
Tip #3 – Show Them the Importance of Being Content
Allow them to see things they must be grateful for, such as a loving family, good food, toys, etc. If they are thankful for what they have, they will feel more content and not aim to purchase what they don’t need.
Tip #4 – Identify the Difference Between Needs and Wants
Kids cannot easily distinguish the difference between what they need and what they want. Oftentimes, they feel compelled to see everything they want as their needs.
Help your children draw the line between needs and wants. Teach them how to prioritize what they need over what they only want. Knowing this will help them spend more on crucial things than frivolous ones.
Tip #5 – Make Them Manage their Current Money
With their allowance, they are able to start budgeting their money. Make them learn how to organize their money into various niches, such as savings and spending.
For instance, make them set a percentage of their total allowance for savings. Then, they can divide the rest to spend in school or something they want to buy for themselves.
Once they are older, you can expand to investing to help them grow their money.
Tip #6 – Teach Them How to Save
Show your kids why it is better to save some of their money rather than spending everything they have. If they see that they are able to save more money, they can use it to buy what they want or use it in the future.
You can open a bank account for them where they can deposit their money saved if it becomes bigger.
Tip #7 – Help Them Set Goals
Setting goals will encourage your kids to save diligently. For example, if they want a new bike, they can use this as a goal to put some of their allowance into their bike fund. It will also give them a sense of accomplishment once they purchase something they love with their own money.
