Everyone wants their children to be financially independent when they grow up. As a parent, you can teach your kids to be responsible and sensible. This can be done by teaching them good habits from a tender age.
So, what to teach them and where to start? Our friends at BankBazaar Singapore are here to give you some tips that are valuable in your kids’ lives.
Value for money
Things become valuable the moment they are in limited supply. As much as you love your children, you should avoid giving them the idea that money is easily received or is inexhaustible. Never spoil them by giving extra cash whenever they want or buy everything they want.
One way of teaching your kids the value of money is by giving them an allowance for doing chores around the house. If your child is a teenager, you can ask him/her to take up a holiday job.
Managing weekly allowance
Teach your children to manage their pocket money by spending it on things they need. You can encourage them to set aside a small amount of their weekly or monthly allowance and watch how the savings grow.
Start by giving your child $30 every month and ask him/her to save a certain amount in a piggy bank. You can reward them if they save regularly, by either giving them a bonus for the number of weeks they save for, or providing a small interest rate on their savings. If they want excess money to buy anything, you could let them apply for a personal loan. You could let them pay the money back to you in small weekly or monthly installments.
Children learn from what they see
Kids learn best by watching their parents. When you go for grocery shopping, take your children along. Teach them how to purchase items with the best value for money. This can be done by letting them select their own birthday gift. If they see you using credit cards all the time, they will learn to rely on these cards too. If you show them how you save for the future, they are likely to become greater savers than you.
Help your children plan a budget to control their spending at school. You can start by asking them to list out all the items they need and how much they cost. For older children, encourage them to consider the facts before buying an item and compare them.
Need versus want
When you take your kids out for shopping, do not be scrooge for the sake of it. This may stress them out. Instead, tell them that you can afford a particular item but choose not to buy it because you don’t need it. This teaches them the idea of good decision-making when purchasing, and teaches them the difference between wants and needs.
Credit card debts
Whenever you are out with your children, use cash instead of credit or debit cards. Explain to them how these cards work and what happens when you fail to make payments on time. This will teach them the concept of interest and repayment.
Pros of savings
You can explain the benefits of savings to your kids. Tell them that if they save regularly then they can buy something more useful or desirable, such as a new toy. Use vouchers and coupons to show your children how much money can be saved through these.
Inspire your kids
Nothing can ever beat real life stories. Tell your children inspirational stories about people who started earning at a young age and how they achieved success. Real life stories can be a complete hit with kids as it teaches them the importance of money management. However, you must avoid telling them negative stories of individuals who went broke because of impulsive buying habits or squandered money on risky investments.
Avoid spoiling them with fortunes
If you give your children all of your fortune, they will never learn the concept of earning and saving money. Why would they even want to get out of their beds on a windy day to go to office and work hard? Do not cripple your kids from reaching their full potential. Teach them to value their hard-earned money and save a certain amount for the future.
These steps can go a long way in building sound financial values in your children. You will get rewarded for all when you watch them be self-sufficient in life. These lessons do not come with the wave of a wand or taught in any enrichment or tuition classes. Your efforts now would truly enrich your child’s life in the future.