|With the current status of the world’s economy, everyone is trying to find a way to lessen their expenses. But for a family with children, teaching everyone in the family to budget can be quite difficult / Photo by: Nattapol_Sritongcom via Shutterstock|
With the current status of the world’s economy, everyone is trying to find a way to lessen their expenses. But for a family with children, teaching everyone in the family to budget can be quite difficult. Most children don't have the slightest idea how money can come and go so easily. They believe that their parents will always have an unlimited supply of money that they can spend on things that they want, but this kind of assumption should be avoided to help them understand the value of money.
There are many reasons why it can be challenging to teach children about money. However, once they learn how to make better spending decisions, they will keep what they learn throughout their lives. Yahoo! Finance, a media property that is part of Yahoo!'s network, mentioned that parents might find it difficult to know where to begin with when they talk to their children about finances. This can be extra challenging for those who are often ill-equipped to give financial advice to themselves.
Clara Wilcox, founder of The Balance Collective, which provides career and work advice for parents, said, “As they get older, especially when it comes to careers, often value is linked to self-worth.” She added that it is essential for children to realize that money is a tool that can help them create opportunities and experiences that can help other people.
Money comes from labor
It is not children’s fault if they don’t have any idea how valuable money is. They are still young and unaware of the link between hard work and money, especially with regard to their lives. In an article published by Living Well Spending Less, a lifestyle website, they mentioned that it is pretty scary for children if they don’t have a basic concept of personal finances.
Parents must teach their kids that money comes from work done at jobs. It is not something that comes out of nowhere, and people won’t give it to them instantly. Parents can set up a commission system where children can get paid for the work that they do, instead of offering them a weekly allowance. This commission can be split into three separate envelopes: one for spending, one for saving, and one for giving.
Their commission can come from the chores that they do inside the house. The closer it gets to payday, you’ll notice how enthusiastic your children could become. The idea of having commissions while doing a chore can push them to do better at their chores. However, parents must learn how to make their children understand that money is not everything. Holly Pither, a PR professional, mother, and blogger, shared, “The other thing I am keen to ensure she knows however, is that buying something shouldn’t make you automatically feel happy.”
|Parents must teach their kids that money comes from work done at jobs. It is not something that comes out of nowhere, and people won’t give it to them instantly / Photo by: Andrey_Popov via Shutterstock|
Manage their allowance
There are several benefits to giving children an allowance. When your child has money of their own which they can spend at their discretion, they will learn how to handle them. Quick and Dirty Tips, a website that provides articles about life tips, mentioned that once the child's allowance is gone, they will have to learn to save up to buy things that they want or need.
Giving them the right amount of money and incentives can teach your child to be responsible with money management. It will teach them how to live within their means by sticking to the rules they created. The allowance must be dispersed on a regular schedule and parents must avoid giving them extra credit. Some financial experts recommend giving out an allowance to be budgeted once a month rather than once a week.
Once you hand them out their allowance, you should let them decide how to spend it on their own. “Teach them about how to save and why they shouldn’t just spend their money whenever they please. Always ask them if they are sure they want to buy something as it could mean they miss out on another item,” Pither added.
|There are several benefits to giving children an allowance. When your child has money of their own which they can spend at their discretion, they will learn how to handle them / Photo by: A3pfamily via Shutterstock|
Be a good financial model
Even adults can still commit mistakes when it comes to their finances. However, remember that your children will always look up to you, so your decisions when it comes to finances will be the best example. It is best to be honest with your children and let them know the reasons for your financial behavior. Let them be a part of your family discussion when it comes to financial planning and management.
Children are prone to impulse buys, and as a parent, you must not encourage this kind of behavior. Instead of giving in and buying the item for them, allow them to know that they can spend their money to pay for an item, but they must understand that they have to wait at least a day before they decide to purchase an item which is above their spending limits.