Raise money-savvy kids by reevaluating your own financial smarts.
CREATED WITH INSULAR LIFE
Children are observant in many ways. They see and follow everything you do, including the way you earn, spend, and take care of your money.Teaching them the value of money at a young age will help turn them into responsible adults who can take on any financial challenge in the future.
1. Practice smart consumer habits at home.
Electricity, water, and other utility bills take up a big chunk of the family's budget. Ask your kids to do the rounds at night to switch off unused lights, unplug appliances, and double-check any leaking faucets. Not only do they get to participate in saving money,they also get to learn the importance of energy conservation.
2. Explain simple budgeting.
Once you give your children a weekly allowance, you can start teaching them how to budget their money. Encourage them to allot a certain amount for school mealsand the rest for their savings account. During the holidays, you can also let them do their own budgeting when buying Christmas gifts for their friends.
3. Show them how to have fun for free.
Most likely, their idea of family bonding consists of shopping, going to the movies, and eating out, all of which require a considerable budget. Don't feel pressured to always provide for these activities. You can plan weekend bonding activities that don’t require a lot of spending, such as making home-cooked meals together or camping out right in your backyard.
4. Practice responsible spending.
Teach your kids to differentiate between need versus want by letting them learn from their financial choices. If your child insists on buying a cheap, poorly made toy, let him. If the toy breaks, don't say, "I told you so." Instead, make him understand his mistake so he'll be more conscious about the decisions that he will make moving forward.
5. Introduce the "spend, save, and share" system.
They can set aside certain amounts of money from their allowance tospend (say, to buy school necessities), save(such as for an expensive toy they have been eyeing), or share(say, by donating clothes they have outgrown) to people or groups in need. You can also encourage them to do the same with the cash gifts they receive during the holidays and on their birthdays.
6. Share your own experiences with money.
Tell your kids about your first job, or how you bought your first car or first house, or even how you had to scrimp and save that one time you got carried awayshopping. Learning about your good—and bad—experiences will make them understand the importance of handling money wisely.
7. Talk about investing and other ways to save for the future.
Kids are used to instant gratification, so you’ll need to teach them the value of thinking long-term, especially when it comes to money. Put the concept of investing in simpler terms by talking about your own financial choices—getting life insurance, investing your savings for their education, etc.
Don't hesitate to talk about money with your kids. Learning about money management is a continuous process, even for most adults. What matters is you equip your children with smart money habits they can carry to adulthood.
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This article was created by Summit StoryLabs in partnership with INSULAR LIFE.