It is the responsibility of parents to teach their children about money. Financial literacy, like any other talent, is a life skill. For some reason, the underlying workings of money and financial literacy are disregarded. As a result, many parents refuse to discuss financial matters with their children and do not specify ways on planning their budget and managing their expenditure.
There are a lot of young adults who are starting their lives without their parents’ guidance and are entirely uninformed about how money works. I’m not referring to the complexities of trading stocks and bonds, dividend investing, or real estate. I’m talking about the fundamentals of how money works. You must pay your debts on time, and understand that credit cards do not provide free money.
I feel it is the cause of parental insecurity. Money is so taboo in our society that we can’t bring ourselves to talk about it with our children. We are either mortified by our poverty, embraced by our prosperity, or humiliated by our middle-class status. Why should we discuss about money with our children if our parents never discussed it with us?
As my kids got older and their vocabulary expanded, I also felt insecure about my money management skills. When my daughter asked for a new toy just the other day, I almost buttered out that we could not afford it. But instead, I took it as a teaching moment for my daughter and started a conversation around it.
We pacify them with platitudes such as, “It’s ok” or “We can’t afford it” without diving into the details. We never say, “we have money saved for this, so we can afford it now” or “we can’t buy that item since our budget is smaller than that, but we can afford something less.”
So, at times, we did not give them the opportunity to ponder and understand the reason behind every financial decision we make daily because it is much easier to make excuses.
Talking about money in front of our children in a straightforward and non-emotional manner can help them comprehend one of the most fundamental life skills.
Talking about money was frowned upon when I was younger. Nobody talked about how much they made, how much major things cost, or whether you could buy something. Of course, sometimes not being able to afford something was unavoidable, but admitting it was embarrassing.
Reprogramming Our Thoughts Around Money
After becoming a parent, I reflected on how my parents must have felt when they raised our family. I guess that my parents very much viewed “struggling” as being disgraceful. A personal failure. Something that reflected adversely on them not having enough money or even choosing to be thrifty. So, as I reflect on my upbringing, I am recreating a better relationship around money and crafting better conversations to tell our kids that suffering is not to be ashamed of nor it is an indicator of moral weakness.
Encouraging financial literacy for kids will not assure that our kids grow up never worrying about money. However, it will offer them the tools and capacity to realise how money plays a role in their lives and how they want it to play a role in their lives, thus being able to spend money wisely
We must never struggle or put the responsibility of managing our money on our children, and we should never make them believe that the burden of finances is something they should worry about or, worse, feel guilty about.
We should talk and be open about things, but we should NEVER make them feel that caring for them is a financial burden. We can teach our children to be hopeful about money by teaching them the fundamentals of financial literacy. You can make money work for you if you understand how it works.
Here are 5 Tips to Teach Your Child to Save Money:
- Make it visible.
While you and I understand what money is, keep in mind that some children have never seen it. My daughter thinks I need to swipe my card or go to the bank to get the money to pay for her toys and ice cream.
Therefore, while educating children about money, it is critical to use real money. Electronic transactions will not work as children must see, hold, and use the money to realise it is tangible.
I am a visual learner, and every time I want to learn something new, I have to draw it out to see it first hand. It’s the same thing when teaching children about money. They need to start with a physical object before moving on to more abstract ideas.
- Demonstrate to them that it must be earned.
My parents always reminded me why they needed to work to buy groceries. So, growing up, I began to equate work with buying things.
Because money is frequently unseen, it is critical to have these conversations with children to make them realise that money must be earned and that it is a vital factor in purchasing the things we require.
Explaining why you need to go to work could suffice. Alternatively, you might go a step further and reveal how many hours you had to work to pay for a particular item, such as the food on your table, their shoes, toys, and so on. It’s interesting how frightening it is (even for adults) when we compute how much time we’ve traded merely to get various products.
The goal behind this is to instil in your children that the things we have in our lives do not come for free and to help them understand why money is necessary.
- Let them earn their own money.
Although I was aware that money had to be earned, I didn’t fully appreciate its worth until I began making my own.
If your children are old enough, you could advise that they may find a part-time weekend or evening job to start earning money. If they’re still young, consider providing them with a stipend in exchange for helping out around the house. I just started it with my kids and put it in their jar.
Children must understand that money is something they earn rather than something they receive for free. Everyone values something they have worked for far more than anything they have received for free, and children are no exception.
Yes, they may gripe and complain about how unfair life is – if they do, pat yourself on the back because you’re teaching them a good life lesson! Life isn’t fair, and nothing is free.
A little ‘tough-love’ now and again will help kids grow into responsible people who understand that they must work for what they want and value the money they earn.
- Start encouraging your philanthropy.
It’s critical for all of us to avoid becoming locked in a scarcity mindset, and your children are no exception. When teaching children about money, encouraging them to be charitable is priceless.
Discuss how some are worse off than they are from the outset of their money-making adventure and get them into the habit of giving a percentage of what they earn to someone in need. It doesn’t have to be a charity; it might be something they buy for a sick cousin or friend, but it’s just a method to establish giving from an early age.
It’s crucial to emphasise that they don’t have to contribute a significant amount, just 5% to 10%, but it’s an excellent method to help kids appreciate what they have and prevent a scarcity mindset.
- Allow them to spend it!
So, now that your children are earning money, we have to give them the freedom to manage their money by spending it. This might be a fantastic opportunity for you to teach kids crucial money lessons.
They’ll realise, after the initial high, that they can’t afford to buy everything they desire and that saving for a high-priced item takes a long time.
There will most likely be tantrums and frustrations along the way, but this is your chance to teach them money skills that will serve them well for the rest of their lives.
You may teach your children that money is worth varying amounts depending on where they spend it by teaching them about getting value for their money.
I also find it hard to explain to my kids the concept of financial management at times, as well as the importance of having a financial safety net in the event something unexpected happens.
So, now that you know how to teach your children about money, it’s time to get started. You don’t have to implement all of the measures at once, but be mindful that each step you take will help to lay the groundwork for your child’s financial future. As a parent, you teach your children financial literacy and fiscal responsibility.
By taking the time to teach children about money now, you can help them develop a healthy relationship with money as well as a kind and generous heart.
Let’s create a future generation that can empower themselves to make better money decisions without creating fear around the subject. I am determined to keep making the changes to better my kids’ future.