This is a Guest Post.
Money has the power to make our lives better; it helps us meet our present day needs and is a tool for wealth creation for future needs. Money management is an important lesson we all need to learn. You may hold a high-paying job but the key to being wealthy is how well you are able to manage, grow and tend to the money you earn, and this is a lesson we need to impart to our children as well. Kids grow up seeing their parents use money during shopping, withdrawing it from the ATMs, writing checks and inevitably, at times, haggling for a good bargain. You want to see your children grow up into responsible adults who are capable of managing their money and needs, and have comfortable lives of their own. So what are the basic lessons you need to teach your child in managing her money? How do you help her realize its value, function and power in her life?
How to Train your Kids in Money Management
1) Help them start early. My 3-year old son has started saving for his first ‘red Ferrari’ car. He began his savings when his dad told him that his dream car is way too expensive for us to buy. Children understand that money is necessary to buy toys, sweets and grocery. They see you pay for what you buy. Since they understand the basic function of money, you can gently encourage them to start saving for something they want.
2) Help them grow their savings. I don’t pay my son for doing chores or helping me in the kitchen, but at the end of the day or week I reward him with some money for being a good boy at his play- school or for sharing his toys with the child of a visiting friend. He is so happy at earning his money that it makes my day as well. We need to help our children enjoy the process of saving money and seeing it grow.
3) Help them keep their goal in sight. There are days when he is tempted to buy the nice yellow truck from the store, but I remind him about his Ferrari and he tries to put his priorities in place. He has now got another jar in which he saves money for his present needs and I make it a point to generously gift to both. I hope in future he will be able to resist impulsive purchases and weigh his needs versus wants.
4) Help them by setting an example. You should be able to teach your child the need to put off desire for instant gratification. They should see mom compare the prices of items, check their quality and value, and then make a decision. They should also see you say ‘no’ to something you want, and understand the reasons for it.
5) Money should not be used as a reward or punishment. You should not refuse your kid his weekly pocket money to punish him. It would be better if your child’s savings and money management is a source of happiness and satisfaction to him. Since it is the baby steps he is taking to a healthy attitude towards money, you should try to make it as pleasant a beginning as possible. His money and savings are just tools to help him.
6) Help him understand the lure of advertising. I remember my son asking me to put the ‘pink cream ‘on my face so that I could look pretty! He had seen mom spending what-seems-to-him hours in front of the mirror beautifying herself. He had put in much thought and found a solution to simplify mom’s life. My eyes welled up at his genuine concern, but I explained to him that it need not necessarily be true. I didn’t want him to grow up believing the world is full of frauds, but I gently made him understand the purpose of ‘commercial breaks’ on TV.
7) Help her understand ‘budgets’. When you take your kid out shopping for groceries or household items, make a budget beforehand. Let her help you with it. You can be ‘reminded’ by her to add his favorite pasta to the list. Both of you can together make a tally of all that you need to buy and how much to spend. When shopping she should see you stick to your budget and list, and not go wildly overboard. This will help her understand the importance of planning before purchases.
8) Help them shop as well. When your child has saved up enough to buy that special toy take them out shopping. Let them pay the cashier on their own. It will be a memorable experience and they will never forget the joy of working towards a goal and being rewarded in the end.
9) Help them understand the value and power of money. Encourage your child to not just save for himself but also for others. He can get his granny a beautiful sweater or a coffee cup when you go visiting. You should teach him to spend for someone he loves and enjoy the happiness he sees on his grandmother’s face. She can also donate some to a charity or to a children’s hospital. Your child should understand the greater good of money.
10) Let them dream. You should never get your child all that he or she wants. There should always be something that they desire or aspire. Let them dream on and try to achieve those dreams. You can be the wind beneath their wings and help them soar!
Conclusion
Children learn from their parents. So it is of primary importance that we treat money with due respect, care and understanding. But you will have to change and evolve as your kids grow. You should interfere less in their buying and spending decisions. They have to be responsible for their money. If you teach your children the proper money management habits they will grow up to be your most wonderful asset.
Frank Pipolo is a 20-year professional executive and writer for WCI Communities, a Florida lifestyle community developer and luxury homebuilder, catering to move-up, second-home and active adult homebuyers.
So true…I think kids learn a lot about finances from their parents. Even if the parent doesn't actively teach the child, the child will still learn by watch how the parent deals with money. Good tips here and I will definitely try to implement them when my son grows up.
Great that’s cool and im sure you will succeed to teach your son important money lessons.
My seven-year old daughter knows already how to save money. During her last birthday, I opened her an account in a multipurpose cooperative in our city. I'm amazed with my daughter because at the very young age, she knows the difference about wants and needs.
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