Most adults lack the most basic money skills – earning, saving, and investing. If some are good at earning, they do not know how to save up for the rainy day. If some are good at keeping money aside every month, they do not know the art of investing and multiplying it. This is mainly because no one taught them money skills when they were kids.
“BALANCING YOUR MONEY IS THE KEY TO HAVING ENOUGH” – ELIZABETH WARREN
By the age of 5, your child must know that money needs to be earned; you can buy things only if you have money and that there’s a big difference between something you need and something you wish for.
Follow this ULTIMATE GUIDE for teaching the basic money skills to your child.
NUMBER 1. SHOW HIM HOW MONEY IS SPENT
To make your child earn and save, you need to show them how money is spent. When they see that money is spent in exchange for a value they need or want and that it is a critical resource they will know the importance of earning more, saving enough and investing wisely as adults.
To show them so, take your child with you to the grocery store. Tell him that the packet of chips costs Rs20 and help him take Rs20 out of his pocket and allow him to pay the money to the cashier himself. This will give him a sense of how much things cost and the value thereof
NUMBER 2. MAKE HIM LEARN HOW MONEY IS EARNED
Your child should know at a very young age that earning money requires effort and initiative. The pocket money you give them daily or weekly is their earning at their age. So how about adding an ‘earning’ factor to it?
To do that, you can keep the money as the reward of doing few extraordinary chores. Keep in mind not to give an allowance for regular chores that they ought to do on a daily basis without a reward attached to it. Things that are a little out of their comfort zone or needs some extra attention and effort is something that can be rewarded.
NUMBER 3. HELP HIM WITH SAVINGS
The best way to help your child do so is by putting money aside in a piggy bank every week or every month. Gift him a piggy bank, so he knows where to keep the savings. Using a clear jar is also a good idea. He will be able to see the money adding up.
NUMBER 4. DON’T SPEND ALL YOU HAVE
Another important thing to make sure is that you do not spend all the money you have whenever you take your child with you out shopping. Always establish the budget for the shopping and make clear lists in front of him and allow him to see how you budget for your utilities and then manage your desires/wants after the needs are taken care of.
In this way, your child knows the importance of not spending all they have in the pocket. They might need to buy something more important the next time around.
Number 5. PLAY GAMES THAT TEACH MONEY SKILLS
There are several games that you can pick up from the local market. Eg: Monopoly for older kids that along with Money skills also helps parents raise their child’ self-esteem, help kids become independent and resilient.
Teaching kids about money is undoubtedly difficult, but following smart ways can make your child learn basic money skills. As he grows, he will learn how to earn, save, and invest more smartly. And so, he never runs into money problems later in his life.