Our life experiences teach us the value of Money in critical situations. We have learned that we should use our Money carefully and we should save it for the future.
It will help if you teach your child about Money since childhood. The value of Money is an ongoing process from the infant to high school. It is a saying: This age-old saying tells us that we must be careful with our Money, it's not unlimited, and it must be earned.
This saying passes from one age group to another and teaches the importance of Money likewise. Children are very proficient at picking up both vocal and nonverbal cues about how their parents treat their home savings.
Look at the crises that occurred due to lockdown this year. Many people become homeless, suffer hunger, lose their basic needs, and so many mortgage crises are happening still. These crises occur because of the lack of managerial finance.
In the same way, your child will suffer if he lacks the value of Money. Teaching kids about Money is an essential thing as a parent. It would be best if you considered it first.
What is the best time to teach kids about Money?
The best time to teach your child about Money is around the age of three. Kids tend to notice their parents at the store and see them passing the cashier Money before getting their things.
Questions about 'What is that?' or 'What does that do?' start progressing at an early age, and it's essential to take benefit of these teachable instants and prompt with clarifying to them that to get grocery you have to give the store Money first.
Mostly educated parents understand that teaching Money management to kids is essential. Studies show that more than 90% of parents send their children to financial literacy courses to brainstorm their children.
When these courses teach kids the value of Money, it truly builds a foundation for financial independence in young adulthood and success overall.
As a parent, you can start the Money conversation as soon as possible. Fortunately, most American parents are already having that Money talks with their children.
Another study reveals that over half, or 56 percent, have already brought up this conversation.
Best Practices to Teach your Child about Money Dealing
Most often, many kids think that Money seems to grow on trees. Unfortunately, the schools do not include Money saving lessons for kids in their Curriculum. So, it's your responsibility to teach your little angels about the value of money.
Here are some good ways to teach kids about the value of money.
1. Be mindful of discussing Money out loud
When you discuss the rents, home supplies bills, and other utility expenses at your home, your child picks up your stress and feelings. As the kids are very adoptive, make sure to discuss the positive attributes of Money management in front of your child. Mostly At the age of 7, kids understand the concept of Money and its usage, which is a plus point.
2. Never too early to teach savings
For kids, Money is a lot more pictorial. The best way to teach your child about Money for saving is to use a jar that lives in a prominent place, so kids can lookout Money being put away and consumed in the future. If they get pocket Money or a gift, show them how to put savings away firstly.
When Children complete their junior school, parents offer them allowances. The regular pocket Money is not a good practice at all. Teach your child about Money by providing them a stipend once in a week or a month.
Kids can think through it is earning as compensation in exchange for performing routines correctly.
The compensation can be a malleable amount that rises as kids take on more responsibilities. Teaching the worth of a dollar is an old perception, but it certainly not stops being significant.
4. Buying and selling
Along with jar placement for Money saving, you can teach your child about the exchange of values. You can get benefits from this opportunity.
Demonstrate your child how the Money you're saving in the living room to buy groceries for the home.
5. Support summer occupations
The early years of a kid are an excellent time for youngsters to consistently begin some laborious tasks to enhance their recompense or blessings. While the recognizable summer occupations can be working at markets or retail, yet these are well known. There are numerous open doors for more seasoned children to make payments on the web or get innovative, all alone.
Support them to utilize a mid-year work to begin the discussion about planning and funds and the duty of bringing in cash and sparing it.
6. Bigger reserve funds plans
When your child is in middle school, he probably has a reasonable comprehension of how cash functions. Rather than letting kids utilize their full recompense to make massive buys, offer them to coordinate their investment funds up to a specific sum like a 401k with a business.
7. Wants versus needs
Teach your child about Money with different scenarios when it comes to Wants and needs. For some juveniles, this is the first occasion when they begin to perceive that others may have more than they do. This is the ideal age to begin clarifying the distinction among wants and needs.
At the point when you're in the store and your kids are requesting another computer game or garment, rather than simply throwing it into the truck, converse with them about whether it's something that is truly essential to them or if it's an incautious Money related buy.
Understanding the contrast among wants and needs can assist kids with settling on sound monetary decisions further down the road.
Money saving lessons for kids
For this complete practice, you have to plan for everything from the beginning. Below are some important money lessons as per the kid's age. Check these out and try at your home.
1. Ages 3 to 5
The Lesson: You may have to wait to buy something you want.
Patience is difficult for a kid of this age, but practice results in perfection. When you visit the store to purchase something like a gift for someone and your kid asks you to buy something for him. You need to deny him and inform him about the reason why we are here. Tell him that we are not here to buy you something for you. We have another purpose.
It will help your kid understand that going to the store doesn't mean you will purchase something to amuse. Along with that make your child habitual of jar saving.
2. Age 6 to 10
The Lesson: It would be best if your child made choices about how to spend Money.
At this age, it’s important to explain to your child, “Money is finite and it’s important to make wise choices, because once you spend the Money you have, you don’t have more to spend.”
The best practice is to give your child some amount to spend, like $2, in a store. Tell your kid to choose what fruit to buy as per our needs. It will lead to the experience of choosing between Money spending choices at the right stuff.
3. Age 11 to 13
The Lesson: The Earlier you save, the faster you can grow.
At the age of eleven, your child may have desires for expensive products as per his interest. So it is a better time to shift your children's patience from short-term goals to long-term goals. Calculation of Compound interest is the best way to understand financial values.
Demonstrate the calculation of compound interest. Like, 'If your child set aside hundred dollars every year starting at age thirteen, you'd have twenty-three thousand dollars by age sixty-five, but if you start at thirty-five, you'll only have seven thousand dollars by age sixty-five.'
This will leads his focus to long term savings. Please have your child set a longer-term goal for something more expensive than the toys.
For example, if your child is habitually buying a cookie in the afternoon, teach your child about Money and its worth. So, he may choose to put that Money toward a tablet instead.
4. Ages 14-18
The Lesson: When likening colleges, be certain to consider how much each school fee would cost.
Examine the “gross value calculator” on college websites to realize how much each college cost when including other expenses besides tuition.
But don’t let the price tag discourage your child. Teach your child about Money by explaining how much more college grads earn than people without college degrees, making it a worthwhile investment.
Discuss how much you can contribute to your child’s college education each year. Every parent should start the college cost conversation by ninth grade. Tackling the subject early and being honest about what your family can afford will help kids be realistic about where they may apply.
But remember that there are many ways to finance college other than with your own Money. With your child, look into which private schools are generous with financial aid, how much of it is in “free Money” such as grants and scholarships, how much in loans that your child will have to pay back, and what government programs can help pay back those loans.
5. Ages 18+
The Lesson: You should utilize a credit card, particularly on the off chance that you can take care of the equalization in full every month.
It is effortless to slide into credit card obligation, which could give your child the responsibility of credit card obligation. Besides, it could influence their parents' record, making it hard to state, purchase a vehicle or a home, or even find a new line of work.
In some cases, imminent managers check credit. Show a kid that any late installment could influence the parent's record if a parent relegates on credit.
Together, search for a credit card that offers a low-financing cost and no yearly charge utilizing destinations like the Bank rate, Creditcards.com, Credit.com, or Cardratings.com.
Clarify that it's significant not to charge everyday things to change that you can't cover with reserve funds if you have a crisis cost. Nonetheless, stunningly better is developing three months of daily expenses in crisis investment funds; however, 'six to nine months' worth is ideal. Teach your child about Money management about how to spending cash on producing crisis reserve funds.
Final Note for Parents
Key points: Focus on the Four C's of Parenting
i. The First C is for Care for child.
ii. The second C is for Control for decision making and problem solving.
iii. The third C is for Coaching to enforce child consequences.
iv. The fourth C is for Counseling to hope for successful execution of first three C’s.
With successful financial conversations throughout the lifespan, you can potentially become a financial counselor to your adult child.
The hope is that you will become a person whom your child will approach for advice because financial conversations will have become a conversation devoid of emotional baggage.
When you teach your child about Money, you will become a parent who has successfully provided financial choices and financial education to your young adult children.
As your children enter adulthood, they will start to think about leaving the family home. Whether in rented accommodation, university, or buying for themselves, make them consider the costs of living alone.
Teach children and teenagers the basics to help them understand the actual cost of independent life. You might decide to charge your young adult children rent or ask them to contribute to household bills.
Many young people also rely on parents to help fund the cost of a house deposit. While some parents can provide financial support, many cannot offer large gifts to their children. Parents who wish to give their children an economic boost should consider saving on their behalf from a young age.
Even a small amount, such as $20 a month, can quickly add up, building a nest egg to pass on to your children in later life.