Six Simple Ways To Make Kids Financially Savvy

By Author: Rana Williamson
Total Articles: 2
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The result is that most of these children grow up without understanding the real value of money and as adults find it difficult to subscribe to the financial discipline required to have a successful life. It is the duty of the parents to teach their children abut money matters, and most parents fully agree with this statement. However, they are at a loss about to do so. For all those who want to see their children grow into financially savvy adults, the following tips might be of great use:

Start early - just as you entrust the child with household chores according to his or her capacity, as early as possible, so you should teach them about money. A good age to start is about 6-7 years old. Do not rush into buying everything they ask for. Make them realize its cost by comparing the ability to buy different things with the same amount. For example, say your child wants a doll or a car. Explain to them, that with that money they could buy five chocolates or two color books and involve them in selecting the best choice.

Ask them to be responsible about certain expenses - Say you can say that you have ...
... put X amount aside for chocolates and fun things. Anything that would be saved would go for Christmas shopping, or for orphanage donations, or for birthday party. Allow the children then to decide how they spend the earmarked amount and ensure that you keep your promise about whatever is saved. In this way, children would learn moderation in spending, and at the same realize the power and benefits of budgeting.

Teach them to save - Most parents give allowance to their children, which generally start with their children asking for some money to buy food from the school canteen. Motivate not force the children to save. Savings needs to be ingrained from a very young age, as this is the real foundation of sound financial management.

Help them set financial goals - Every child wants something like a cycle, a laptop, a lay station, a vacation with friends, designer clothes, and the like. Allow your child to dream big and help them achieve their dreams through budgeting, saving and loans. This is a great way to teach them about credit reports, the role of loans and the way you repay them, the impact of the credit score on interest rates and so on. As the child grows, you could be the bank for your child, so you could lend the money he or she needs and through this playacting teach your child invaluable lessons about credit. Use all the factors that a real-life credit report uses, and give your child scores accordingly. Children learn faster about credit reports and scores through such role playing, than any other method.

Involve the children in the budget of the family - As they grow, let the children know the actual financial status of the family. It is important that they are able to see how the money comes and goes, so they would understand the importance of budgeting, saving, adjusting and planning finances. In this way, they would not expect extravagant things and would stay realistic about their demands.

Teach them the value of money - Help your children earn money by initially doing small extra tasks around the house. Be careful not to pay for the chores that they are supposed to do as their duty, or they would expect to be paid for everything they do, which is not correct. There should be a clear demarcation between tasks that they have to do, and extra tasks they could do to earn money. Connect these earning with their savings and goal setting.

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