Of all the life skills you can teach your children, how to balance a budget is surely one of the most useful. Money – or the lack of it – has a huge impact on our daily lives. Learning to set financial limits that make sense and stick within them is a big lesson to pass on in a world of instant gratification and easy credit. Having enough money to live comfortably simply means that you have more choice – and something most of us would wish for our kids is that they get choice in their lives, about what to do, where to go and who to be. It may not be quite as exciting as a family adventure, but sound money management is a skill that will pay them back for years to come. So here are some tips on how to teach the value of money…
Be A Financial Role Model
Children pick up far more through our actions than they do through our words, and they will become confused if you tell them that the family ‘can’t afford’ something, only to purchase it on credit. It’s important to model good financial behaviour and involve children in appropriate money conversations about big purchases, or even everyday transactions. You can discuss the price of items when doing the shopping, or show them different options on Choose My Car and discuss what costs a driver must take into consideration. Making money a part of every day life, rather than keeping it a mystery is very important.
Let Them Make Decisions
When it comes to their own money – either an allowance, or money received on special occasions, such as a birthday – let your kids have a say in how to spend or save it. Explain all the options but let them take control (as appropriate, based on the individual). Some kids find it helpful to set up an old jam jar with a savings target written on the side for something they really want, as a visual indicator of how much it will take to save for an item. But if your child chooses to spend everything, then within reason you should let them, so that they see the consequence of their actions – that the savings jar remains empty and the ‘treat’ item unpurchased.
Show Them Hard Work Pays Off
If you don’t link allowances to chores, you could be missing a trick. Teaching children the value of work and linking it to money is an important concept. Draw up a list of age-appropriate chores that all your kids can join in with. Not only does it teach them that effort brings reward, but it also gives them a sense of ownership over the house and shows them that it’s an effort together to cook and serve meals, keep the home tidy and follow a cleaning schedule. Show them that money has to be ‘earned’, as it’s the only way to really instill a sense of value into them. Those small treats will taste so much better when they have done something to earn them!
*This is a collaborative post