Giving your children a solid foundation when it comes to money management and teaching them about money matters, will enable you to raise financially savvy kids.
Raising Financially Savvy Kids
It’s critical for your children’s personal development that you teach them from a young age, the basics and benefits that comes with budgeting and being mindful when spending money. Doing so will help to establish good personal saving and money habits for life.
When your kids are young they look to you as the main educator when it comes to their financial literacy. Believe it or not, but you are seen as their primary role models and it’s from this which they learn and establish their attitudes and beliefs when it comes to money.
Studies have shown that financial skills and good money management habits are formed when young. In Australia these habits are on average formed by the time children are early teens around the age of 13.
The ways in which you pass on sound financial habits don’t need to be that complicated. Simple acts such as taking your children with you when you go to the bank or other financial institutions are useful methods.
Children learn by watching and studying the habits of others. When your kids watch you saving your money and making financial transactions such as the weekly shopping, money management skills are passed onto them and remembered.
Kids who learn how money works and the concept behind saving for a rainy day, are in a much better financial position going into adulthood, compared to children who are not exposed to financial learning from an early age.
Children are quick to learn the simple difference between wants and needs and how they are separated.
When your kids are not exposed to you making simple purchases, such as paying your utility bills or paying at the checkout counter, it can be difficult for them to wrap their heads around financial concepts.
To avoid your kids seeing money as an “imaginary” or “invisible” concept, be sure to share with them how you make your financial decisions.
It’s a good idea to show tell your kids why you are comparing prices of items at the supermarket, or why you are waiting for an item to be on sale before purchasing it.
Another great way to raise a financially savvy kid is to give them a weekly or monthly allowance. A piggybank or a glass money jar is a fantastic way of teaching kids the concept of saving their money.
Encourage your children to make sound financial decisions, teach them about budgeting and show them the benefits of saving.
By encouraging saving habits in your kids, they will learn from a young age the difference between earning and spending and the consequences of not having any savings.
If your kids want to buy something, give them the opportunity to save for it from their pocket money. This re-enforces the “savings concept” through a family involved and fun way.
Start by giving your kids a piggybank and then when they are a little older set them up with their own bank account. This will guarantee that your children will be setup for a future off financial empowerment and responsibility.
