How to Educate your Children about Financial Management


How to Educate your Children about Financial Management

Personal Finance ─ Being a Parent is nothing short of a delicate task; you must take care of your own family and put your children in a home where they will be nurtured and loved. Not to mention the fact that you want to give your kids the best things in life ─ the best childhood, the top quality education, and of course, the brightest future for them to sow. Thus, they are now your top-most priority in your life, and you will do everything it takes to provide for them, even at your expense.

A parent’s love for their child is truly a remarkable wonder of this life. However, with this kind of endearment lies the risk you might not recognize until it is too late. This risk is the absence of financial literacy. For many parents, topics regarding money are seen as “taboo” and “adult stuff.” With love, we often shower and spoil our children with things they want without them learning the actual cost of it. 

But this does not need to be the case! Teaching them could be equally enjoyable and healthy for both the parent and child. Below are some of the ways to achieve this.

A Practical and Enjoyable Way to Educate Them

1) The most important thing might not surprise you. However, this must be stressed ─ Set an example.

According to a study by the University of Cambridge, children start to pick up and form money habits as early as seven years old. Therefore, it is crucial to be mindful of the habits you exemplify. At the end of the day, it will not be easy to teach them something you yourself do not do or follow. Just remember to always be casual and light with it!

2) Challenge them to save as much money on their favorite piggy bank/jar

Your children love to play! And they also love receiving rewards. For example, you could challenge your kids to save money for a particular timeframe, and whatever they save, you could reward them by adding to it or even doubling it. By doing this, they will start associating saving money with a reward and pick it up. You can also help them set a goal beforehand so that they have something to look forward to and will understand the significance and power of savings.

3) Show them that things cost money; there is an opportunity cost to everything

Finally, it will be tempting to buy everything your kids want. However, this will reinforce the notion that they can quickly obtain things without even saving and working hard for them. At an early age, teach them that nothing is free and your budget is limited. Just be gentle with this and help them grasp the situation in the nicest way. 

Additionally, explain that everything has an opportunity cost. “Darling, if we buy this x thing, then we won’t be able to afford this y thing.” With this, you are also teaching them to be content and appreciative of the things they have in life.

A Future That They Will be Thankful For

Leaving this aspect for the school system or society to teach your kids can be disastrous. Not only can they pick up ill advice and habits, but they might also shun away from financial education altogether as they were not exposed to it during their childhood developmental stage. Thus, they might grow up without the proper tools and knowledge to navigate this world, and worst could leave them vulnerable to financial ruin.

Therefore, this aspect is essential for their healthy development. Furthermore, applying these tools will equip your children with a much-needed life skill. Being financially literate is practical knowledge that they will be eternally thankful for.

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