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Raising Financially Savvy Kids: A Mom’s Guide to Teaching Money Skills

by Lyle Solomon
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Money is a crucial factor in everyone’s life and therefore requires your concern. “Bad money habits can spoil your financial future.” This line is well understood by most adults, but what about kids?

As a parent, it’s very important to teach your children the importance of money. Otherwise, they could become a reckless spender or can live beyond their means. So, before giving them pocket money, try to teach them some basic financial education.

These lessons can enlighten their future financial life. Because once your children understand the importance of money, they will be able to manage their finances of their own.

kid saving money in piggy bank | kate_sept2004 from Getty Images Signature via Canva.com
Photo credit: kate_sept2004 from Getty Images Signature via Canva.com

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Why Is Teaching Kids About Money Important?

It is quite obvious that you would want your kids to turn out to be successful people after they grow up. So, it is reason enough to talk to your kids about the importance of money and managing it responsibly. This will help your child to develop a healthy attitude towards money in the future.

Discuss money with your child.

You should have conversations with your kid about money, and in regards to this, you can start a small allowance or an opportunity for your child to complete different tasks to earn money every month or maybe every week. Mention that money does not always come easy, and you are required to work to earn that money. You can also tie this allowance along with some household chores.

Talk about saving money.

Talk to your kid about the importance of saving and investing money. You can give some colorful and fun examples to make your kid understand this concept. In regards to that, you can buy them one piggy bank and ask them to put money into it. There are various fun piggy banks available now, like the ones having various compartments for the purpose of saving, spending, and investing money and also for the purpose of charity.

Tell them that things may not always go as planned.

Tell your kids they may not always get what they want. For example, if your kid wants to eat out, if it isn’t in the budget, you will have to skip it. If they ask you to just get money from the bank, say that your banks are like their piggy bank. It can go empty if you are taking more than you put in. Also, mention things like unexpected expenses that can pop up at any given time.

Give an idea about debit and credit cards.

Talk to them about debit and credit cards if you think your kid has grown enough to understand that concept. Tell them that these are easy-use plastic money but should be used carefully and only during emergencies so that they do not incur huge debts.

Enlighten them about debt.

As a mother, you need to teach your kids about poor money management and its effects. Tell them that bad money management can lead to debt that can cause severe damage to their financial health. So, when dealing with credit cards or loans, they need to be very particular about the payments.

If they miss a single payment, they can welcome a huge debt in their life. Besides, you need to explain the way to get out of the debt as well. Explain all the debt payment options, like consolidating your debt, settlement, and avalanche methods. These will help them to get an overall idea about debt and its related consequences.

Allow them to manage their own money.

To teach your kids money management, you should also have your finances under your control. Your kids will learn from your activities the importance of managing money responsibly. You need to make good financial decisions to teach your child the right money management.

Make saving fun for your children.

Try to make your children feel that saving is not a fear factor. Saving is a friend that can make life easier. So, everyone should learn how to save money. And this is quite an easy and achievable task. Thus, they will feel motivated and learn the lessons positively. Try to make the saving process as easy as a game. It’s very important to make it an easy and fun task unless they may lose interest.

Ask them to purchase their things.

Ask your children to buy their things from the shop. Thus you can teach them about the right way to shop. Also, they will understand the difference in prices between different items and, in turn, realize the importance of money.

Teach them how to do split budgeting to shop for each required item. Ask your children to shop according to the budget and not exceed the limit. Thus, you can build a good habit in them, and they will learn the importance of funding and its benefits. They can also learn how to keep track of spending regularly.

Allow them to have a part-time job.

Many types of jobs (part-time, jobs on weekends) are available these days. So, encourage your children to get involved in one such part-time job. This way they can earn money and can learn some new things as well. Gradually, they will understand the importance of money. Ans will take the initiative to save money of their own. It also allows them to get involved in household work, such as cleaning their room and mowing the lawn. And as a reward, give them some money.

Final Thoughts

Money is the most critical aspect of our livelihood. Just as air and water are important for our living, so is money important for us to live a decent life. The child should be taught about life in such a way that they grow up to be a responsible person and can live a decent and successful life.

With that being said, teaching your kids key money skills is an essential task of yours. In addition to discussing the importance of money, you should also teach your kids how to manage money in a better way. It is very much required to make the children aware of the money matters. They should understand that “money does not grow on trees.” Everyone is expected to work to earn money. Additionally, saving and properly investing hard-earned money is important to secure their financial future.

Author

  • Lyle Solomon

    Lyle Solomon has extensive legal experience, in-depth knowledge, and experience in consumer finance and writing. He has been a member of the California State Bar since 2003. He graduated from the University of the Pacific’s McGeorge School of Law in Sacramento, California, in 1998 and currently works for the Oak View Law Group in California as a Principal Attorney.

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