Learning how to value money is a lesson that is learnt very early. Even when you examine your own habits and attitude towards money, you will find that you are able to trace its roots all the way to your childhood. This lesson is even more important in the materialistic and money-driven environment that children are frequently exposed to. By giving your child the right guidance regarding money, you are eventually empowering him with habits that will allow him to face financial challenges with confidence.
Here are a few tips that will help parents teach their children about money.
- Take your child with you as often as you can when you go shopping. Encourage him to observe what you buy and how you choose your purchases. The child will learn much faster about how you should use money. Learning by example often proves to be more effective than learning through instructions.
- Help your child distinguish between wants and needs. Children tend to be notoriously impulsive when it comes to buying toys or video games. They want it all now. But illustrate the difference through situations. For example, if your child needs a pair of shoes for school, you would take him out to buy a pair as soon as possible.
But if they have their eyes on the latest Playstation 3 football game, request them to wait a little for it. Chances are, after a week or 10 days, they will decide that they would rather buy a remote- controlled airplane instead.
Since children are prone to changing their minds often, this kind of thoughtful deliberation over expensive purchases will teach them to think before actually buying something.
- Allow children to earn some money by allotting them chores or giving them tasks to do. For example, cleaning up their room could be set at a rate of £3 every Saturday. If they do not perform the task, they forfeit the money for that week. This teaches them that money is usually earned and not simply given.
- Encourage children to have a savings account of their own. This is an invaluable step that not only motivates them to work towards saving money but also introduces the concept of banking at an early age.
- Ensure that your child is aware that he has to repay money to people from whom he has borrowed cash. This discourages children from turning into compulsive borrowers when they grow up.