As a parent, there are many different things you have to prepare your children for. And while some of these things include responsibility, general manners, and others, often overlooked teaching among most parents is finances and how to handle money.
Some parents assume that their little ones will naturally grow up and understand how to save and spend wisely when quite the opposite couldn’t be more accurate. Young adults constantly point out that they simply don’t know how to save, pay their taxes, and spend responsibly.
So, instead of merely hoping your little ones will grow up to be financially responsible adults without much guidance, you should start teaching them how to save and spend wisely from as early as possible. And these practical solutions will help you kickstart the journey.
Debit Cards For Kids
The fin-tech-for-kids industry has never been hotter. Companies have raised hundreds of millions of dollars in recent years with products geared towards youth bank accounts, investment apps, chore apps, and debit cards for kids. And this is excellent for parents teaching their children to save and use money wisely.
It’s not entirely plausible to teach children to save and spend the traditional way, as cash is gradually being weaned out of the economy. We can expect the near future to be completely cashless. That said, it’s best to get debit cards for kids and use these to teach your children modern banking.
And when choosing the right debit cards for your kids, you should consider the monthly fees, cards that come with apps and banking platforms that are easy to use, and accounts that offer other banking features to educate your child on investing and trading as they grow older.
Let Them Earn Pocket Money
Some parents have the approach of giving their children a set amount of pocket money weekly or monthly, regardless of any factors in the child’s behavior, schooling, or chores. However, other parents let their little ones earn their pocket money, which is a great approach. And there are tons of suitable chores for children, such as washing the car, doing the dishes, sweeping floors, or even folding laundry. With that said, be sure to choose age-appropriate chores, as younger children shouldn’t be shoveling snow or mowing the lawn.
Instead of simply handing out money for no reason, letting your children earn money by doing simple chores, obtaining good grades, and showing a positive attitude will give them a sense of self-worth. This way, you’re children will already understand that money is earned and not simply given.
Lead By Example
Once your kids have their debit cards and receive small amounts of money for chores or good grades, you should lead by example in terms of spending money. Of course, your children will want to spend every cent they have, as they probably assume they can simply earn more.
However, if you let your children spend every cent of their pocket money, they won’t learn financial responsibility. Instead, you should lead by example and try savings methods yourself, such as budgeting, cutting out extra costs, and others. Furthermore, it’s key to make sure your children see you’re making these efforts as they will gradually make sense of the cause.
Explain How Every Cent Adds Up
There’s no doubt that you’re little ones aren’t too concerned about their future finances, as children generally aren’t. However, it’s your job to make sure they understand the purpose of financial responsibility. And teaching them that every cent adds up is the best way to encourage a money-savvy way of thinking from an early age.
Instead of letting your kids spend their money all at once, you should show them how little bits of money can genuinely add up to a more significant amount that can be better used than a few cents. So, if your child is hoping to buy a particular toy, and they only have enough money to get a few packets of sweets, there’s a good chance they will be prepared to settle for the sweets.
However, if you explain that not buying sweets now means they can later gather enough funds to purchase the more expensive toy, they will see the purpose of saving understandably. There’s genuinely no point in teaching financial responsibility with mortgage loans and interests rates, as they won’t find this relative or engaging in the slightest.
Teaching Your Kids To Budget
Teaching a child to budget might seem challenging, although starting at the right age is crucial. If your children are ten years or older, you can begin the process of teaching them to budget. You can use online budgeting tools, although sticking to plain paper is also a practical option.
You will need to encourage your children to write down savings goals. Next, you should also encourage them to write down their general spending habits while listing the average costs of each. Once they have their expenses on paper, you should then show them where they might be able to cut down to reach their savings goal sooner.
When your children know how to budget, they will tend to be more careful with spending their money as they will have their savings goal highlighted. And knowing how to budget is a simple skill that will serve your children well as they grow into responsible adults.
Teaching Banking Privacy
It can be somewhat tricky to teach children the importance of banking privacy precisely because you will be overlooking their finances for quite some time. However, you must encourage them to keep their finances a secret and avoid sharing their passcodes and PINs with anyone except yourself.
Banking privacy is crucial for everyone, not just children. It’s no secret that cards can be clones, and accounts can be hacked. And you won’t want your little one to lose their savings simply because they didn’t know. So be sure to explain the importance of banking privacy and keeping their finances quiet, even to their friends.