The earlier one understands and appreciates the value of money, the easier it becomes to manage personal finances. One of the struggles of parenthood is to teach children how to appreciate money. Considering that children, for obvious reasons, do not work, they are less inclined to appreciate how hard it is to earn money.
One of the industries which consume a lot of money from children is gaming. Children regularly badger their parents to buy them the latest video games or downloadable content. In a society where parents spend less time with their children, it is very easy for them to succumb to the pressure being exerted by their children. It is of paramount importance that children are taught from a very early age to manage money, especially as we move towards a more cashless society.
So how do you teach children the value of money?
Pocket money
Pocket money is becoming less common so children will no longer appreciate that money is earned on a periodical basis. Children will not appreciate the fact that the items that they want cost money, and at times, a lot of money, which you need to wait for to earn. Give your children pocket money, enough to live well, but not too comfortably that they do not feel the need to save. Having a fixed amount of money will enable them to understand how long will it take for them to buy something specific that they want. This develops financial planning skills.
Involve your children in day-to-day money management
Allowing your children to participate in day-to-day money management activities will enable them to better understand financial management and normal everyday struggles. Such an example would be to take them with you to the supermarket and decide which groceries and other items to buy. Not only will the children be thrilled to be involved in adult decisions, but they will also develop a certain degree of financial maturity.
Involve the kids in financial planning
Planning a holiday? Involve the kids to give them a good understanding of the financial planning required to take a vacation. They will understand that a budget needs to be set and as much as possible, adhered to. This will require research as to how much accommodation and flights will cost, together with the overall spending money based on the planned activities.
Positive reinforcement
Reward your children when they display financial management maturity. This will allow them to understand that proper financial planning is rewarding, which is an intrinsic part of learning.
Using these strategies will allow your children to become more financially independent, taking informed decisions which will positively impact their future.
