Children and finance matters don't really go hand in hand, when we were kids, I don't think we ever thought about money or its value. Kids start to learn basic money change and simple calculation in grammar school. Money saving, management is not really taught in school, unless one takes finance as a profession. That means as parents its our job to educate children early on adulthood's financial challenges.
Start teaching early in Childhood
Teach children the value of Money early in childhood has the advantages for the child is immediate and long term. Learning early will allow children to make smart purchases and they will adopt the true meaning of "investments". This may even lead them to understand why they can't always get what they want immediately and will give them an understanding about avoiding debt, saving for the future and money problems. The young mind absorbs and retains information earlier so it is best to start as early as possible. You may ponder what to teach or when and how to teach your children. Use your children's natural inquisitiveness to learn, to guide you.
"Money doesn't grow on Trees". If you see it from a child's point of view, money emerges from mommy's purse or daddy's pockets; we are practically "making" money in our pockets in a child's world. This is the best time to start teaching them when they start to notice money as an object. They will naturally come to belief that money is readily available whenever it's needed. Generally we have heard the term "Money doesn't grow on trees" from our parents or grandparents when we were young. This non constructive explanation is not sufficient enough. We have to explain to the child as simply as possible why we can't meet their every demand. This approach is much more constructive then the latter.
Start with a Piggy Bank Whenever you hear "Mommy I want this, or buy me that" take a moment to respond wisely to the situation. This kind of situation is a good opportunity to educate the child on the importance of saving up; before they buy the things they want. Saving can be a fun experience for the child. Introduce a shoe box, piggy bank or an old jam jar for them to start saving their money. Teach them to decorate their little "bank" and you can explain to them how you save your money in a real bank. As they save their money, you can reward them with an additional amount as interest for their effort. Encourage your kids to save a fraction of their allowance to be used for a particular goal, this will in turn motivate them to save more.
Allowance on a Schedule
Sometimes even very young children can begin to recognize the notion of earning money. Explain to the child that you can only spend money from what you have earned from working. Start of by paying them allowance on a schedule, and guide them by making goals on how to save and spend their allowance. You might consider paying your kids for errands outside of daily duties, such as washing the family car or helping to garden. It's very important to strictly stick to your payment schedule or else the lessons learned may be lost on them.
The teaching of money matters to your children about our complex financial system may seem overwhelming, but you can help put your child on the right track by encouraging smart habits now. Answering your children's questions truthfully and in terms they'll comprehend can help them begin life on sound financial footing.
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