As moms and dads, there is a lot to share and teach your sons and daughters about how to earn money, save it, spend it, and be responsible about it.
Even in childhood, parents play an important role in the financial education and planning of their children .
This guide, from the Financial Planning Association , provides suggestions on how to teach kids useful money management tools that they can pick up and use for the rest of their lives. An important lesson that, as parents, we sometimes forget to impart.
Tips For Teaching Children To Manage Money
1. The First Steps: When And How
When is the best time to start?
Many experts agree that the best time to start talking to children about money is as soon as they learn to say “I want” and advise using everyday situations (shopping, paying for services, going to the bank, etc.). ) to show them how decisions about the use of money are made.
How to talk to your children about money when one has not been able to manage orderly in this aspect?
Children are very prescriptive and will observe the way their parents handle money , learning from it, even without anything being made explicit to them. Therefore, it is suggested to keep in mind that one is being a model for them.
Hence the importance of trying to turn negative behaviors into positive ones. It is healthy to share, as parents, the experiences and values that you have regarding money.
Prepare a “statement of principles”
An extremely useful way to generate a space for exchange about money with the whole family is to prepare a kind of “statement of principles” in which values and priorities are defined, when it comes to money.
Children can actively participate by answering questions such as “What do you think is the most important thing for the family?”, “What do you think our goals should be?” or “What can each of us do to raise the money needed to meet those goals?”
2. Earn Money: Monthly Payments, Household Chores And Small Jobs
If, as parents, you want your children to manage money efficiently when they are adults, it is recommended to allow them to earn money, manage it and learn from that experience. The small mistakes they make will help them learn and understand how to avoid bigger mistakes in the future.
One of the most common situations that involves managing money for children are the “monthly allowances” or “weekly allowances” that parents grant them for their daily expenses (transportation, a snack at school, etc.).
In this way, children begin an apprenticeship, based on the fact that the money granted has to last them a certain amount of time.
In many families , another way in which children receive money is by taking care of certain tasks around the house, instead of receiving a fixed amount per week or month.
As for adolescent children, it may be a good idea to encourage them to get a job for a few hours. To the administration of the money earned, the learning of the job search is added.
3. Savings: The Piggy Bank, The Savings Account And Learning To Set Goals
One of the best things that parents can do to help build financial stability in their sons and daughters is to instill in them the habit of saving.
To do this, we suggest:
Setting goals
Younger children are more stimulated if they put money away based on something they really want.
It is good to help them calculate how long they will be able to get it, depending on how much they can save per day or per week.
Have a place to put money
Whether it’s a piggy bank, an envelope or a savings account, it’s important that children get used to the idea that there is a “place” where they should keep their money, and that it should not be spent immediately, but rather it is being saved to fulfill a purpose.
4. Spend Money: About Decisions,Budgets And Debts
Making decisions
It is healthy to allow children to make their own decisions about how they will spend their money and the consequences that may have.
This is a good time to talk with them about the concepts of “needing” something and “wanting” something, managing to establish the difference and defining priorities.
Budgets
One of the best ways for older kids to learn how to manage money is through the use of a budget that they can create together with their parents.
It is advisable to follow up weekly or biweekly to assess whether they are respecting the established spending guidelines.
Debt
Teens should learn about credit and debt while still living with their parents.
A good way, for example, is to grant you a credit card extension with a very low spending limit, which will only be used for previously agreed expenses.
The summary must arrive in the adolescent’s name and must be paid for by the adolescent in a timely manner. If not, it is suggested to cancel the card.
5. Investing In The Future: Looking A Little Further
It is vital that parents talk to their children about the future (what job they would like to do and, consequently, what they should study to be able to perform in that profession). In these conversations, parents should highlight the fact that when they work hard at school, they are investing in themselves.
Financial Planning is the process of wisely managing one’s finances in such a way that it is possible to realize the dreams, desires and objectives set, while acquiring the necessary tools to deal with the financial obstacles that inevitably appear in the different stages of life.
Just as it is possible to carry out this process with the help of a Financial Planner, as parents, it is possible to accompany children in their learning about their beliefs, values and behavior regarding money so that they acquire “good financial habits”.
Learn More About Finance From ProgressionBusiness
