Many people believe that exposing children to money early will make them become practical and savvy at an early age. But many successful people have shown otherwise. Understanding money and its value will make a person appreciate labor and manage money meaningfully. Robert Kiyosaki, the author of the book “Rich Dad, Poor Dad,” an American of Japanese origin, once said a sentence that resonated with many people: “If you cannot teach your children about money, someone else will, such as creditors, police, and even scammers. If these people educate your children about finances, I am afraid you and your children will pay a higher price.”
Therefore, many progressive parents have introduced financial education to their children at an early age. The Jewish people even use the magical language of money to welcome a newborn. Babies at the age of 3 have been taught about money by their parents. They also let children play a game of guessing the value of money to learn about it. Especially educating children about money helps them understand that money is created from labor, not from their parents’ pockets. Former German Chancellor Angela Merkel once said that educating children about money is a mandatory and important course, just as the role of money is the focus of the family.
Ways to educate your children about money
Don’t call it “pocket money,” call it “earnings”
Let your child understand that money is earned through labor, not that parents have money and the child just needs to demand, beg, and whine to get it. Instead of giving money to your child easily, create opportunities for them to earn it. For example, let the child do household chores. The child will feel more responsible and will never underestimate money.
Play games related to spending
There are interesting games that teach children about money, such as the games Monopoly and Life. Instead of boring games, occasionally play games that help children develop their spending abilities. A recent report from researchers at Cambridge University (UK) revealed that children’s money habits are formed at the age of 7. Therefore, never think it is too early to educate your children about money and money management.
Teach your child to share
Children learn from the actions of adults. You can share your money through charitable activities, helping the poor, buying food gifts for needy neighbors, etc., and your child will learn your generosity. You should also encourage sharing money to understand that its value can create good things, not just for practical purposes. You can encourage your child to set aside a portion of the money for charity to encourage your child’s humanitarian activities.
Give pocket money weekly instead of daily
This method allows children to have time to spend money and make plans, avoiding the situation of spending money comfortably without thinking. Let the child manage their own expenses. If you give money for the whole month, the amount will increase, and your child may spend it all at the beginning and have none left at the end of the month.
Encourage saving
Give your child a piggy bank to save money and encourage them to divide the money into 3 portions: one for spending, one for saving, and one for charity. This method teaches your child to allocate money and encourages them to become a better person by learning to share with others while taking care of themselves.
Let your child participate in family spending meetings
This depends on your family’s lifestyle. If there are such meetings and your child is old enough to understand what is going on, you can consider letting them participate to learn how to spend money wisely and manage finances better.
The 3 ‘jars’ formula: Spend – Save – Give
Many adults start dividing their income into different packages; some divide it into 5, others even divide it into 7. For children, it is naturally better to choose a simpler approach. The most common formula is to divide it into 3 funds: 40% for spending – 50% for saving – 10% for giving.
Children can use the spending portion to buy snacks, candies, and personal items. The saving jar helps them accumulate money from an early age, which can be used for education or personal upgrades. The giving jar allows children to contribute to society and share with those in need and help their friends.
Be a role model for your child
As parents, you are the role model for your children. If you lie about spending money, your child will learn that. Consider your purchases, avoid wastefulness and impulsiveness because children learn these behaviors quickly. And if you treat money as everything, your child will learn that from you.
Allow your child to make mistakes
Sometimes, mistakes make a lasting impression on children and teach them valuable lessons. So, sometimes, you know your child will make a mistake but let them go ahead and make it. There are times when you don’t need to intervene right away but let your child make mistakes. There is a story about a father taking his child to a game, and the child spent the money on the game without the father stopping him. When the child asked for more money to play further, the father firmly refused. But that was a lesson for the child to learn that money is not easy to come by, and if you don’t know how to spend it wisely, it will run out quickly. The child learned a valuable lesson through the consequences.
Teaching children about money is not simple, but you must teach them if you don’t want them to live in poverty and debt in the future.
Should I pay my child for doing chores?
In conclusion, the decision to pay children for doing household chores is a personal one and can vary based on individual family dynamics. While it can teach valuable lessons about work ethic and money management, it is important to strike a balance and ensure that children also understand the importance of contributing to the family without expecting monetary rewards. Ultimately, a combination of intrinsic motivation and appropriate financial incentives can help children become responsible and diligent individuals.
Expert Shares 3 Ways to Teach Kids about Money for a Successful and Wealthy Future
Teaching children about money is an essential task for parents, but not everyone knows how to do it.
