If you were to look at yourself through your child’s eyes, then you would see that you look like an ATM, with this magic handbag or wallet that disperses endless supplies of cash for them to spend at their will. To me, Felix the Cat and his magic bag come to mind.
If you were to look at your bank statement through your own eyes, however, you only wish the situation was that easy. Unfortunately, we all know how difficult it is to stick to a rigid budget and the time we spend at work earning our paychecks every couple weeks.
It is important for children to understand the concept of money and how to appreciate it at an early age, so as to better prepare them for the financial challenges to come.
- The first and best way to do this is through direct education. As you sit down to set out your monthly meals and prepare your budget, invite your children to sit with you and show them exactly what you do.
Use visuals to show a limited amount of money coming in each month, and then illustrate how each portion of that money is dispersed.
Using real-life examples which they can relate to, helps to solidify the lessons you are teaching.
- If you utilize ways to save money, then be sure to include these in your lessons. Items like buying toilet paper in bulk or taking advantage of sites like Groupon Coupons to get discounts on regular monthly items are great lessons to teach.
If you are looking for a challenge, give them a certain amount of ‘money’ and task them with finding a coupon or discount on an item you need for the money you have just given them.
- Giving your children money is the next step is helping them to understand money. Of course, this money doesn’t come for free – associate it with tasks around the house, in the way you would for an allowance.
By showing your children the value of saving for a large item instead of spending small amounts on smaller items, you are teaching them a valuable lesson on how to manage their money effectively.
This activity also works to improve their work ethic and associate a positive attachment with work financial freedom. Introducing children to finances is an important step in their life and one which is best experienced with the help of a parent. When they get older and pass along this knowledge to their children, they will thank you for instilling these value in them at such an early age. It’s better to learn to stay out of debt rather than how to get out of it once it’s too late.