Money Lessons To Teach Your Kid

Financial literacy like any kind of education cannot be acquired naturally; it must be learned. As a parent, it is therefore important to talk to your kids about money and savings and impact on the financial management skills necessary to avoid costly financial mistakes later in life.

Children need to learn about how to save at an early age: the value of money, how to earn it, making a budget and the benefits of saving. Your child will reap lifelong benefits from your lessons on financial responsibility and entrepreneurship.

Here are tips to teach your child about money.

Give them money to manage

For your kids to effectively learn, there must be actual money involved in the lessons. This may be in the form of an allowance. Whichever option you choose, make it clear to them that the money you give them must be used wisely. Giving them control over that money is essential for them to learn about financial management. Do not dictate to them what to do with it.

However, make it clear that you will no longer be financing the purchase of some of the items you used to buy for them. It may be toys, clothes or smartphones.

Teach them how to earn money

Financial success is dependent on one’s ability to earn money. Teaching your children how to earn money will help them have a better appreciation of the value of money. Children should be presented various age-appropriate means to legitimately earn some cash. You can help older children – teenagers – work at small jobs or help around the house for an allowance.

Better still, you can encourage entrepreneurship amongst your kids. You can start fostering entrepreneurship skills in your kids at an early age to help them succeed later in life. Encourage them to use their skills and talent to earn some money.

Making the most of their skills and talents

If they are artistically talented, this could be something to pursue in terms of helping them understand the value of their skills for later life. They could maybe create items to give as gifts or sell them for local charity auctions or raffles. They can learn the papercraft at origamiway.com and share their designs. This will give them an understanding of ensuring a child knows to appreciate talent.

Encourage independent decision making

Give your kids the liberty of choosing how they spend their money. This does not, however, translate to ‘hands-free parenting.’ Give them your advice but let the final decision rest with them, even if they mistake.

This will build their confidence to make better decisions next time. Point out their mistakes sensitively. Moreover, when you let them make their own decisions, they learn another important lesson, which is how to make independent decisions.

Teach them how to budget

You must teach your children how to plan, budget and spend their money. They need to know how to keep track of the money earned. Most importantly, they should know that they don’t have to spend everything they earn. They should set aside some money for a big-ticket purchase in the future. Budgeting goes hand in hand with saving.

For example, if they earn $10 every week, teach them how to save in order to buy that $100 toy that they want. Just by following a few simple steps you can help prepare your child and make them aware of how to save.