Use These Tips to Help Your Children Develop Smart Money Habits

Most children interact with money by piggy bank savings, buying lunch, or items at shops at their parent’s request. However, some children need help with financial literacy. Teaching children about money helps them develop money management skills they can use as adults. In acknowledging Financial Literacy Month this April, we prepared a few tips you can use to guide your children in developing smart money habits.

Tips to help your children develop smart money habits.

Display smart money management habits: Children observe and emulate many of the habits they see around them. You can make money an informative but fun part of your conversations. Talk about the benefits of saving, budgeting, investing, and financial literacy. Let them observe you choosing needs over wants. You can treat yourself at times so they see how investing, saving, and budgeting can produce other rewards.

Teach them about needs versus wants: Most children like having their desires catered to. So, explaining the difference between needs and wants can guide children’s aspirations. Items like food, shelter, healthcare, clothing, and education are some needs you use as examples. However, fast food, an expensive phone, or a tablet are wants that can wait. You can test your child’s understanding by asking them to tell you things in your home that would classify as wants or needs.

Simplify learning about money: You can start teaching your children about money at the preschool stage. They can use fake currency to pay for items they like in games or make-believe. Discuss the cost and the balance that results from spending. This activity will help them understand that some items are more affordable. Try to include real-life experiences, such as taking them to the bank or supermarket and explaining what is happening.

Give them practice with real money: Encourage your older children to save part of their allowance for items they want to purchase. You can introduce them to investing by offering to match the money they saved. Practising investing can motivate them to save instead of spending money on instant gratification.

Teaching and modelling healthy money habits will help children make better financial decisions as they age. A financial planner can guide you if you need help making smarter money decisions. You can use Find Yello for financial planners, financial institutions, and related services listings. 

Sources: Investopedia, Today, LGFCU, Forbes, Money Helper, Teachwire.