Financial Decision Making In Children: While it may be true that schools are teaching more fiscal-based classes, learning about money, seeing how it is used, earned, and saved wisely, will always start at home. The child’s age will determine the nature of the lesson. The younger they are when you start, the more comfortable and confident they’ll be with money, and the decisions they make which involve saving, spending, and investing it.
Let Them Participate in the Day to Day
Most of us were not born with a silver spoon in our mouth, and even if we were, money handling tips are still worthwhile. When your children are small, let them sit with you at the table while you pay the bills. You can also use this opportunity to show them how you designed the monthly budget template for your household. It’s true that they may be building a giant Lego city at the time, but they’ll soon become accustomed to the idea that there is a certain amount of time spent toward paying for the things you need, require, and enjoy. Necessities like the gas and electric, water, cable, and credit cards used to make other purchases, must be paid on time, and with specific regularity. Most children will ask what you’re doing. Give them a straightforward answer. If they are inquisitive and want more details, provide age-appropriate clarity for them, as well.
Give Children Reasonable &Age-Appropriate Chores with an Allowance
- Children who are 2 or 3 years old will not understand the concept of earning money and may even attempt to put coins into their mouths. Start them out with simple tasks for earning an allowance, like brushing their teeth and putting their toys away.
- 3- & 4-year-olds can do things like putting books back onto shelves, carrying their plate back to the sink after meals, and placing their dirty clothes into their clothes hamper.
- By the time, a child is 5, their ability to comprehend and execute small and large motor skills/tasks will be more clearly defined. Many parents start giving children an allowance at this point, such as a quarter a week, to be placed into a piggy bank or jar. Children, at this age, can fold clean clothes, sweep, organize their bedrooms, and more.
- Older children should be assigned chores that help the family and require the use of their own strengths, both physical and mental. Lawn mowing, weed pulling, and helping to make a grocery list, are all chores which children can accomplish to earn their allowance. You might disperse their allowance in the form of cash or even a gift card, which can be purchased and sent instantaneously via online, text, or email. Allowance in the form of gift cards also allows children to save their money more easily, letting them economize at a young age.
Compare Unit Prices at the Grocery Store
When your children are old enough to comprehend simple math, take a little bit of extra time at the grocery store to comparison shop. Show them that purchasing a smaller unit may not be as cost-effective as a larger unit, cereal for example so that they can look at prices discerningly as they get older.
Create their Own Separate Savings Banks
Piggy banks work well only for coins, so consider mason jars if you are paying them with gift cards or softbills. Sit down with your child and talk to them about what they would like to buy once they’ve saved enough money. Create a specially labelled jar for this purchase. They can decorate the jar with stickers or glass paint. Have another jar for “Rainy Day” savings, to be used only in case of an emergency. A third jar may be designated to a specific charitable contribution.
Inspire them to Save by Matching their Savings
After the mason jars are in place and your child is enthusiastically filling them, consider offering to match a certain percentage of their savings. It might be dollar for dollar, 100% matching, or a quarter for every dollar earned. While this practice is generally seen only in large companies with their 401k’s, it will help show your child that saving is important, and rewards are earned based on your response to their ability to do it.
Encourage them to Start their Own Business
For most kids, being a part of a community is a given. There are neighbours, and family or friends living somewhat nearby. Sit down and talk with your child about what those individuals might need. Do the elderly in the neighbourhood need their lawns mowed, driveways shovelled, or front yard raked of leaves? Is it warm enough to start a lemonade or Kool-aid stand? Collaborate with them on every step of the process so that they can feel knowledgeable, confident, and organized.
Helping your child, from a young age, learn how to handle money, and the power and value it holds, can build their reasoning skills and their ability to make wise financial choices, throughout their youth, and then as adults.