Children are like sponges. They soak up everything they hear and see. That is why modelling how to be responsible with money is an effective way to teach financial literacy.
Below are five tips to teaching your children about money as they first appeared in It Pays To Know:
- Set a good example. Show them good spending and saving habits so they learn how to manage money well.
- Open a savings account for your child. Have them make their own deposits and withdrawals to understand how it works.
- Teach your children how to save. Help them to calculate how much they need to save to reach their goal and benefits of compound interest.
- Talk about needs versus wants. Help them make good choices by spending money on the things they need before the things they want.
- Teach them how much things cost. Help them learn the prices of goods and services, and what they can afford with their money.
Use activities such as grocery shopping to give lessons in managing money. If we don’t teach children how to manage money, somebody else will. And that’s not a risk we want to take.
Teaching your children about money at any stage is going to take time on your part. It will not be easy, but if you want your children to know how to successfully manage their money when they get older, taking the time now will be worth it.
Your spending habits as a parent will go a long way in teaching children how to balance it out by showing them the other ways money can be used. Developing these life skills early on can make all the difference.