Why wait till they are older when you can teach your child about money now?
Whether we are financially stable or not, our desire is for our children to have it better. When financial knowledge is instilled in our children from a tender age, it becomes easier for them to make better financial decisions.
In this article, you will learn not only how to teach your child about money and boost their financial stability but also the five basic things you must teach them using the things that are and are happening around them.
Why is It Important to Teach My Child About Money?
Many of us would have turned out a lot better financially if we were taught about money from a young age. Money is an essential tool in today’s world, and it is a fact we can’t deny.
A popular saying goes, “Money makes the world go round,” and it is true. Even if you want to render help to people, without money, your impact will be greatly limited. Also, without good knowledge of how to acquire, manage, save, and invest money, we will only end up lavishing the money we would have used to better our lives or that of others.
It is important to teach your child about money and openly talk about it when they are around you. By making money discussions a normal one in your home, you help naturally learn how money is made, managed, grown, and best utilized.
When and How Do I Start Teaching My Child About Money?
Once your child can recognize money, you should start talking to them about money. Most children start recognizing money and some of the basic ways we use it at age three or four.
Don’t make the mistake of thinking that that’s too early. At that age, kids have started understanding and learning from our actions and words; therefore, don’t miss the opportunity to align them on the path to financial stability.
But how do you talk to them about money? They are still young, and the approach should suit their age. As a parent, you should utilize every opportunity.
Kids learn a lot by doing, therefore, take them with you when going shopping, like for groceries. Let them see how you pick items, what you consider before selecting an item, and how you pay for them. Kids are highly observant; they will notice those, and also, while at the store, always talk to them while you shop.
For example, this is a clothes-washing detergent. I have to get it because it is an essential tool for keeping our clothes clean. This is you explaining why the item is important.
Continue: This one goes for one dollar, and the other goes for two dollars for the same size, and they are both great products. But due to the money you have, you would be picking one of one dollar. This would explain to them that you consider your financial capacity before picking up an item.
Believe me, before the shopping is over, I have taught them great and practical lessons about more. Simply make the teaching spontaneous.
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5 Important Things to Teach Your Child About Money
There are basic concepts about money that we use daily. Those are the core lessons you should start teaching your child from a tender age. These basic concepts and realities about money will serve as a foundation on which other ideas are built.
Below, we will discuss the five important things you must teach your child about money.
1. How Money is Made
Money is not picked or plucked from anywhere. This is a fact that you must explain to your child. Some parents in our society don’t take the time to explain to their children how money is made, and that is dangerous. Ignorance can lead to the existence of crime and crisis. When a child doesn’t understand that money is a byproduct of value, they will approach money wrongly.
Teach your child that money is exchanged for goods and services. The only way to make money is by getting paid for what you sell or the service you render. Give them examples to better drive home your point. It will be easier and better to use yourself as an example, explaining to them what you do and how you make your money.
For example, I am a coach. I help parents become better parents and raise exceptional children through the application of proven techniques and strategies. So, parents pay me to teach and guide them to become better parents. I am a service provider, and I am paid for my services. That’s how I make my money.
With that example, you will bring home the explanation, and it will be easier for your child to understand.
It won’t only make them smarter; it will make them feel carried along in the family.
2. How to Spend Money
You have explained how money is made; it is time to let them know how it is spent. After all, we make money to be able to cater to our needs. So, we make money and spend money, and that’s why it creates balance.
There are ways we spend money, either by cash means spending money you have ready. In this case, you have the money either at hand to spend. When you spend money in cash, it means that you have a physical currency that you pay with.
Another way we spend our money is via debit. Debit simply means that instead of paying cash, we pay using either our bank debit card or through mobile, internet, USSD code transfers, etc. What happens is that we pay with the money we have available in our bank accounts or other digital platforms.
The third way we spend money that you must teach your child is credit. Credit means spending our money in advance. With credit, you are simply spending the money you will make in the future via credit card or account. A credit card is a pre-funded card that allows you to spend money and get the money taken from your future income.
You can also explain these concepts while shopping or while watching their favourite show with them. The idea is to utilize any opportunities to teach them about money.
3. How to Budget Money
Your child must know what budgeting is and why it is important. Without budgeting, we will find ourselves going on shopping sprees. Explain to them that budgeting helps you manage money by prioritizing needs over wants and shopping for things based on their order of importance.
When budgeting, we don’t only consider the money or credit we have; we consider the importance of each need and how urgently we need them.
You can use things around them to explain this concept better. For example, while at the mall, you can explain why you are getting an item over another, even when they are both important. They should know that when you are faced with making a buying decision between two needful items, you should consider how urgent you need each of them.
Budgeting is how we make the best out of our limited resources and can buy the things we need within a space of time.
4. How to Save Money
Let your child understand the concept of saving money. Explain the importance and different ways they can save money. We save money to earn money to either enable us to purchase a particular thing in the future or handle an emergency. Saving money will easily become a habit for your child if you start from a young age.
There are different ways we save money that your child can start practicing with immediately, such as using a saving box. This is a traditional method, but it is effective and convenient for kids, as they still don’t have access to digital or conventional banking systems. You can get a savings box for them and ask them to always set aside a percentage of every amount they are given for saving.
5. How to Grow Money
You have taught them how to make, spend, and save money; now how to grow money. Teach them why it is important that we grow our money.
Growing money helps us increase our financial capacity. Our incomes are not enough; we need to find a way to invest a percentage of our income.
Though at a tender age, your child is not qualified to handle investment on their own, it is still useful knowledge they should have.
Explain to your child some of the ways money can be grown, such as through investing in real estate, stocks, solid assets like gold, or starting a business, etc.
Also, to help their understanding, start growing your money one way or another and carry them along in the journey. Always share updates about your methods with them even if they are still young and don’t have something to contribute.
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Conclusion
Did you know that teaching your child about money doesn’t only benefit them? Yes, it does benefit you also as a parent. It becomes easy to apply other financial principles or concepts when you have a child who knows what they are but also why you are doing them.
Teaching your child about money should be spontaneous, especially when they are much younger. It is also easier to teach them on the go, such as while shopping at the mall or during your monthly financial audit.
Children learn better when they practice, so create opportunities for them to practice what you are teaching them. Do not think they are still too young to learn about money. Money is an essential tool in our societies; therefore, once they can recognize money, start teaching them about it. Teach how you make, spend, budget, save, and invest money.
Start today, and boost your child’s financial stability.
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