As a parent, you want the best for your child, and that doesn't necessarily mean you want your little one to have the best clothes, the newest toys, or the coolest gadgets. Most likely, it means you want them to be safe and have a foundation on which to build a good life.
So, start talking to your child about money from an early age, show them where the money comes from, how you divide it monthly, how to spend wisely and how to set goals to save.
Talk to your child about money
You don't have to be an expert to teach your little one about money. You just have to start a conversation on this topic when the opportunity arises at home or when you are at the store or for a walk.
Children naturally ask for the things they want, and it's hard when you have to say no. That is why it is appropriate to talk about how we all have money that is limited and we need to decide carefully what we spend it on.
Also, talk about how you earn the money you need to spend on bills or other necessities. Explain that you receive a certain amount of money monthly or even notions like salary. The money you earn as a family must cover the essentials, such as food or clothes. Also, explain to your child how you choose the most important things to spend money on.
After they start receiving money, perhaps on holidays, from grandparents, other relatives, neighbors after helping them with various tasks (from walking the puppy to shoveling snow from the driveway in winter), children are generally tempted to spend all their money at once.
That's why it would be advisable to show your little one how to track their expenses to see where all the money is going. Start using everyday situations, such as shopping or paying with your card.
Another very important aspect to discuss is the difference between "needs" and "wants". Encourage your little one to think about these before spending their money on sweets or toys.
While you are shopping, you can teach your child how much things cost by showing them:
- different prices for similar items;
- how the offers compare;
- how to determine which items are better value;
- how to determine price differences and discounts.
At the same time, explain to him how the card payment is made and mention that every time you pay, the money in the account becomes less and less.
Help your little one understand the connection between work and the cost of things. For example, show him an electricity bill or a phone bill. Explain how many hours or days you had to work to pay that bill.
Learning to save is a vital life lesson and the child should be encouraged in this direction.
Use a clear jar to collect bills and coins. The piggy bank is a great idea, but it doesn't give the kids a visual. When you use a transparent jar, they see how the money adds up, today a 10 lei bill, tomorrow more than 1 lei.
A Cambridge University study found that children's money habits are formed by the age of 7.
If the little one wants a toy, tell him how much the toy costs and together take the money from the transparent jar (if it has already been collected), go to the store and let the little one pay for the desired product. This simple action will have more impact than a five minute lecture.
Give your child pocket money
Pocket money can help children understand the value of money. You can choose to pay it for certain simple tasks around the house. When he walks the dog, when he mows the grass, when he helps you wash the car or when he takes out the garbage, when he cleans the room or helps you prepare dinner or takes the laundry out of the washing machine, all can be perfect situations for the little one to learn the value of money by receiving a certain amount for the "services" offered, in this case a little help with the housework.
Make sure you reduce the amount of pocket money if tasks are not done or not done correctly. This will teach the child that he is only paid when the work has been done to a certain standard.
Set financial goals together
Teach your little one to set goals and prioritize what they spend their pocket money on. Many times the little ones are tempted to want different toys or clothes that they see online, in stores or at their friends, especially when they are using their parents' money and not the ones collected in the piggy bank.
So the next time you go to the mall and he asks you to buy him some toys, to avoid impulse purchases, remind him of the goal he is saving for and how long he will have to wait until he reaches the goal if he decides to buy those toys. Show him that it takes a certain amount of time to save up all the money to buy the thing he wants.
Teach your little one what a monthly budget is
Involve the little one in making the family's monthly budget. Explain how much money you have available each week and how it is spent. He will start to get an idea of the cost of living and how long it takes to save.
Finally, encourage your child to donate some of his savings to charity. This teaches him that money can be used to help people and is not just for buying things.