In recent years, childhood has changed, and today’s parents grew up in a different world. Money and spending are now more virtual and invisible. It is now highly vital to teach your kids sound financial principles to draw on throughout their lives. These principles will apply whether or not they live in a cash-based or cashless world.
Teaching children financial literacy can be challenging, especially when they are young. However, introducing them to the value of money and the responsibility that comes with it can positively impact their financial future.
Concepts such as saving, spending, and earning money should be taught from an early age so that children can put positive spending habits into practice. But why is it so important to teach your children about money? How will this benefit them?
Importance of Saving
Talk to your children about your financial experiences as a child growing up. Let them know how saving helped you or how the lack of saving negatively affected you. They must learn both sides.
Teach them that saving money is vital and can help in times of difficulty. You can start them off by giving them a piggy bank and teach them how to save from pocket money or allowance. You can even reward them when their piggy bank is full. Ensure that whatever your methods are, you reinforce the importance of saving.
Involvement in Decision Making
Whether you are deciding on going for a vacation or simply planning a budget to go grocery shopping, get your children involved. Allow them to see the process involved in buying something. Talk to them about how you earned money and how long you saved to be able to afford certain things.
Involving your children in financial decisions gives them the experience they need when they are on their own. It also gives them the ability to make mistakes so you can guide and correct them where necessary.
Avoiding Unnecessary Expenses
This is one of the most important discussions to have with your children. Making unnecessary purchases is responsible for landing a lot of people into debt and bad credit. If your kids learn the difference between wants and needs, it will enable them to spend their money wisely.
Kids will always be tempted to buy the latest gadgets, toys, and expensive clothing; however, it is your responsibility to teach them how to prioritize their wants above their needs. Sure, every once in a while they can buy something they want. However, it should never take precedence over necessities.
Kash Kids is an organization established to help children learn and understand financial literacy. We are dedicated to helping our students solve financial problems by empowering them to make the right financial choices.