Money is a crucial aspect of life. Parents spend millions on children’s education but not enough time in teaching finances for kids. Experts believe that financial literacy is important and helpful for children, even if they are young. Here in this article, we have gathered 10 money lessons parents must teach their toddlers or young kids.
1. Basic concept of money
Sometimes, kids build an assumption that money can be dispensed from the ATM anytime as and when required. Parents must educate their child how money acts as a medium of exchange and how it circulates in society.
2. Explaining your job/role
Explaining your own work as an employee or role as an entrepreneur might be an unpopular idea. But it can prove to be highly valuable. Explaining your regular day at work will also teach them the struggles you go through.
3. Sharing personal experiences
Personal experiences are way more effective than stories. You can have an open conversation with your kid about your own life’s good and bad financial decisions. The lesson of educating your kid from your own mistakes is unmatched.
4. Encouraging saving
Even some adults struggle to save and avoid unnecessary expenses. If parents inculcate the habit of saving from an early age into their children it stays with them in the long term. If they are old enough encourage saving money for kids by getting their savings account opened in their name.
5. Introducing savings for a goal
Teaching about ‘saving money’ is as important as teaching about ‘earning money’. If a child has a dream toy or game, you can ask them to contribute a part of its price by saving on their own. This will also inculcate the habit of being patient while saving for a set goal.
6. Letting kids earn through small chores
Letting your child understand the value of money through their own hard work is the best lesson. You can assign the child an easy task of their choice in exchange for money. A task could be watering plants, dusting, making the bed, etc.
7. Sharing budget goals
Quite a few times parents shy away from discussing the money problems when kids are around. However, you can use the opportunity to teach the kids about how you are saving for a particular goal and the necessary budgeting for the same. Early money management for kids really helps in handling finances better during teenage.
8. Discussing credit
Kids notice adult behaviour and make assumptions too. They might notice you having different cards but not understand their purpose. You can explain finances for kids by how debit and credit cards work & the risks associated with unresponsible usage of the same.
9. Teaching investment
Once your child has built a basic understanding of money and basic savings, you can start teaching them about stock markets, mutual funds and investing. You can also provide financial education for kids by discussing the costs of a car, house, higher education, etc and how these goals can be achieved using investments.
10. Make room for mistakes
Every house is a school, and every parent is a teacher. You, as a teacher, must allow your child to make a mistake while making a buying decision, even if they waste money. But be ready to teach them about their mistakes and guide them in the right direction.
You can also share the money-related lessons you taught your child in the comments. 🙂