Children are the pride of their parents. Responsible kids gladden the heart and even improve the quality of your life. When I first had kids, my intention was to teach them skills that will help them survive in the modern world. Talking with my husband, one skill we identified to be the most crucial is financial literacy.
While we couldn’t bombard them with technical stuff at a young age, we could always teach them the basics. From the time they were five and six, respectively, we started teaching them basic financial concepts that would ensure they have a solid foundation. Hopefully, by the time they are of university age they will be ready to handle everything that comes their way, be it the student loan debt (and the potential pitfalls, like those discussed on https://www.thekelleyfinancialgroup.com/post/late-loan-payments-off-credit-report) or the rest of their financial future.
The following are the basic money management skills that we managed to instill in our children from a young age. You can teach the same to your children hassle-free and witness as they become financially savvy teenagers and eventually young adults.
The number one skill and the most crucial one that you can teach your child is saving. Instill in them the fundamental of saving before spending. Most people who have had their financial lives run into a mess never understood this basic concept.
I managed to teach my boy and girl this lesson by buying each one of them a small piggy bank for their use. Each day, whenever I would give them money, I would ask them to put 25 cents into the piggy bank. In no time, this became a habit that they would follow even without my supervision. As the kids grew into teenagers, they would periodically tell me how much they had in savings and how much was needed as a top-up to buy something they were saving for. Nothing makes me feel prouder as a mother than seeing my kids adopt this valuable skill so early in life. As they grow further and get ready for college I am sure they will be able to keep up this kind of reasonable spending and saving, hopefully tackling their student loans smartly with this knowledge.
After your child saves part of the money that you give them, there is something that remains. This money needs a budget before spending to ensure prudent use. As a parent, teaching your child the essential budgeting skill will help avoid any instances where your child grows up to be wasteful. Budgeting is a skill that calls for discipline, and through it, the child comes to learn how to tame unwanted spending desires.
To drill this skill into my babies, I used to ask them to write a shopping list for all their school supplies. With each one having their own shopping list, I would then sit them down and make a budget for the money available while taking them through each step. In a short time, I could notice that my kids started making their own budgets whenever they had money to spend from the upkeep I gave them. In some cases, I would see them go back to their budgets and cancel out items they deemed wasteful or not urgent at that moment.
It is not enough to just save and budget for your money. It is also important to have practical goals that you work towards. This basic concept comes in handy when instilled in a child at a young age. Teach your children to set saving goals that they save towards in their piggy banks. It could be something as simple as saving for a gift for their sibling on their birthday.
My kids always set saving goals each time they save their money. Initially, it was about gifting each other on their birthdays or buying something for their dad and me on Christmas. Over time, this developed into a habit that guided their financial motives as they grew older.
Teaching a child the right thing to do is the best thing I can ever gift them as a parent. The tips above will help you teach kids about financial independence from a young age and help them grow into responsible adults.