One of the most valuable skills you can pass on to your children is appreciating the value of money. With this, they can understand how the world works, be frugal, and keep their bank balance healthy. The last thing you want is for your child to go down a path that leads them to crippling debt and endless financial troubles. That’s why it’s important to teach them the ins and outs of finances from an early age, to ensure they have the best possible chance of mitigating any potential financial problems. But how can you do this? Read on for some tips to take on board.
Give Real World Examples
For your children to truly understand how finances work, you’re best off showing them real world examples. This could be going through your own bank account, highlighting how credit cards, direct debits, and wages work. You can also teach them how beneficial investments can be long term, as savings often result in funds growing over a long period of time. Why not open their own stocks and shares ISA so they can get an insight of how it all works first-hand? This is not only a great way to teach them about the value of money and how to invest, but it also means that by the end of it they should have a nest egg. For more info on how to open ISA’s for your children, click the link.
Pocket Money
By giving your kids a small amount of pocket money each week or month that they can spend however they like, they’ll learn how much things cost. As well, if they want to save up for a more expensive toy, for example, then they’ll have to save up until they can afford it. This is an important lesson for them to learn. As well, you could introduce monetary rewards for them doing chores at home. This could be cleaning your car, changing their bed, or walking the dog – of course, these all need to be age-appropriate chores, so set them accordingly! By doing this, you’re giving them a taster of what is to come later on in life. It will give them a greater understanding and appreciation of the money that you give them.
Don’t Set a Bad Example
Kids’ minds are like sponges. They soak up everything around them, including your behavior. So, that means you need to lead the way in money management. Show your children how it’s done well. Or, more importantly, how it shouldn’t be done. If your children notice you’re stressed, living from payslip to payslip, unable to afford the things you want, this will make them think this way of life is the norm. If you splash the cash as soon as you get it, it’s indicating that money is frivolous, and not something to be taken seriously. So, avoid setting a bad example by keeping on top of your finances, budgeting for all of the essentials you need.
