As a parent, you have a huge role to play as far as shaping your kid’s financial attitude and behavior is concerned. In fact, a high percentage of young people look up to their parents to show the way.
Nevertheless, having a conversation about money isn’t an easy one especially if your child is a teen. To make sure you’ve set your children on the right path, start teaching them about money as early as possible. Basically, a child will grasp a concept faster if it’s introduced when they are still young. Besides, the teachings can last longer and become more effective.
Here, you’ll find some tips to help you in shaping the financial future of your child.
Hold a Regular Conversation about Money
Whenever you get the chance, share any applicable money insights with your kids. If you are out shopping, take your time to teach the child how to successfully compare deals while keeping quality in mind. At the same time, you can task them with the responsibility of finding coupons for items they want you to buy for them.
Every time you go to the bank in the company of the children, always tell them why it’s important to put some money in the savings account.
Help Your Children Make Solid Goals
If children understood the intrinsic value of saving, they would put away all their allowances for worthwhile expenses. However, this is not the case.
If your children receive some form of allowance or other income, it’s very important that you help them to budget and save a portion of this allocation. To get them started, you can make it a requirement that a certain percentage of the allowance must be saved. To keep them motivated, ask them to settle on a short term goal of an item they would really want to acquire. While acquiring the flashy toy may be only a near-term goal, the most important objective is nurturing the habit of patience before acquiring luxury items.
Open a Savings Account for Your Children
After the child has attained an age where they understand a significant deal about money, it’s time to help them open a good savings account. Basically, you want to teach them the importance of having some savings stashed somewhere at all times.
According to research, children who embrace savings accounts early in their life have a higher tendency of building several assets when they become adults. At the same time, people who have some sizable amounts of money in a savings account have a better chance of making good investments.
Encourage the Kids to Take on Entrepreneurship
When teaching the children about finances, it’s imperative that you make them understand how business works. As such, it would be great if you held conversations with the child asking them to tell you a few business ideas they would want to start.
If you notice that your child has a talent that can be nurtured to become a great business, don’t hesitate to encourage them. Along the way, help them understand the importance of treating it like a business early enough.
The law of supply and demand may appear complex to children at first but you can simplify this for them to make them understand. At the same time, it’s important to help them internalize the need for innovative entrepreneurs in the society.
Always Be on the Lookout for Teaching Moments
The best moments to teach your child about money happen to take advantage of the right timing. More often than not, there are times when you are on the verge of making a critical financial decision.
As far as a child is concerned, their minds are more likely to be impressed with a new idea when you are just about to get them a brand new toy. In addition, you could also talk to them about money when you give them an allowance or any gift with a high financial value.
Nevertheless, don’t be too hard on them or make the conversation monotonous and boring. With a little creativity, you can come up with interesting ways of communicating the intended message.
Help Your Children Understand the Concept of Wants and Needs
One of the most valuable lessons you can teach your kids is the concept of needs and wants. When they understand this, it becomes easy to differentiate between luxuries and necessities. Let them understand that food, clothing, transport to school and work are some of the important needs. On the other hand, find a clever way of showing how a toy is a luxury that can be foregone.
Depending on their level of understanding and their outlook on the matter, this can transform into a great opportunity to talk about saving instead of unnecessary spending.
Teach them about Credit
If you want to help your children grow financially, it’s imperative that you help them understand how credit works. Unlike in the past, the media is filled with tons of messages about various sorts of credit.
If you don’t teach them the principle behind credit, they might end up picking the teachings from the wrong sources. That’s not a risk a good parent would opt to take.
While credit is a great way of solving some issues, it has its downside too. Try to be a living example of good use of debt and ensure you help them understand why debt shouldn’t be used for certain expenses.
Basically, it’s likely that they will encounter an advance loan offer early in their adult life thanks to online lending platforms. If they understand good borrowing practices, they will definitely be responsible with loans.
Final Words
Being a parent isn’t an easy task. However, there is nothing that can give a parent lasting joy as seeing their children succeed. Instead of leaving the financial future of your kid in the hands of another person, why don’t you play your role and show the way?
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