One of the most important things a parent can teach their child would be those related to money. By teaching your children lessons about money, you will not only be passing to them a deeper understanding of how to manage money, but you will also be able to pass on your values to your child:
It is not a bargain if you do not need it
Most people tend to buy things, especially those that are on sale or at a discounted price, as they feel that they are getting their money’s worth. But always remember that you will only get your money’s worth if you are buying something you need. If you are only buying something because it is on sale, then chances of you using it are close to none. In the end, it might just be tossed to the back of the closet to collect dust. The best way to teach your child this lesson would be to allow them to buy things, despite you advising them not to. But make sure these items are not so expensive. Should they not make use of the item, they will learn how to pick things properly and differentiate wants from needs.
Little savings yield big rewards
The lesson of savings is never an easy thing to teach. As children, especially the younger ones, have a harder time grasping the concept of delayed gratification, it is hard to explain the concept of savings. One way to teach them would be to aid them in their purchases. Instead of buying them what they want immediately, come up with an amount you will shell out (say 70% of the total amount. The ratio can vary, depending on how old your child is). Then the remaining 30% should be paid by your child. If your child receives an allowance, the payment would come from the extra he would put aside. This will teach how to choose his purchases carefully and learn the art of delayed gratification.
It is essential that your child is taught as early as possible to compare prices of items. It is easier to just pick something off the shelves and buy it. However by instilling this trait in your child, your child will bring this trait with him till he grows older. That way he will be more mindful of prices and more careful with his finances. It is also good to train your kids to be on the lookout for coupons. But make sure that the coupons you get are for items you usually use. That way you will really save up.
Money is earned and is not an entitlement
Most children take their things for granted without realizing that everything we have are present because we have worked for it. It is important that children should know that their toys and allowances are not gifts. These are privileges they receive and they are not entitled to them. One way to teach this is to refrain from giving allowances or cash gifts for keeping their room clean. That chore is expected of them as they are part of the family. However if you request them to do out of the mill chores or those that you do not usually request from them, such as washing the car, you may give them a token of appreciation. That way they will feel a sense of accomplishment. Moreover they will understand the difficulties one faces when trying to earn money. Make it clear to them that you will give them something (eg. The basics) and the rest will need to be earned. One example would be you giving them a certain amount for going out with friends. But should they want anything more, it is all up to them. This will teach them how to live within their means or find a way to earn more.
Start teaching as early as possible
The best way to teach your child about money would be to give them a bit of money to handle by themselves. The best time to give your child an allowance would be by the age of 7. Set an amount and pass this to your child on a weekly basis. You will be able to gauge the way your child will handle from this. From there, you may guide your child to the values you wish him to inculcate.
With all these lessons, you can be sure that your child will be on the way to financial freedom in the future.
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