This article highlights some important steps that parents can take to nurture money management skills in children. It presents a summary of practical and theoretical approaches that you can use to enhance the process.
Most important lessons
The most important lessons that people learn in life often come to them when they are still young. That is why, it is necessary to teach kids how to be money smart while they can still absorb the lessons. Smart kids who understand the nature of money are more likely to become financially stable adults as opposed to their less disciplined peers. Teaching kids about money should take place naturally, in a manner similar to other childhood lessons. Just as children learn a language by imitation, they will also learn about money through a parent’s example. Lessons in school and money games for kids can complement this process, but the primary source should be the example of an elder. The example from parents or elders mainly manifests in three areas: earning, saving and spending. You can teach a child how to earn money as a kid by giving them tasks at home for which they get payment or linking them with friends and clubs in which they can do simple tasks for small pay. This instils in them the idea that the only way to earn money is through genuine work for a commensurate pay.
Teach kids how to save
The financial world is now awash with bank accounts designed to teach kids how to save. These mini-accounts are similar to the piggy banks that many children learn to use within their families. The simple act of putting away an amount of money on a regular basis builds financial discipline in a child. Doing this with a savings bank account is even better because the child learns how to navigate the financial world at an early age. Teaching a kid how to spend money is just as important as the previous two steps. When a kid saves his pocket money to spend on something in future, they not only learn financial discipline, but also appreciate the importance of setting goals. Managerial traits start growing in them and strategic thinking takes root. Money games for children also exercise these capabilities, fostering the best money management traits before a kid moves out of their home.