Discuss priorities and luxury in budgeting
As a mum, I have shared with the children the difference between wants and needs. In the saving tips of this column, we get information on the need to show your children how to become good savers.
Use your budget as an example. Let them know why their toys are at the bottom end of the list while foodstuff is on the top list.
Pay allowance in exchange for extra house chores
As much as you need to teach the children a sense of responsibility; it is also time to show them the value of hard work. Give them a task and pay them an allowance.
Monitor its use. You can let them buy their favorite toy with money. In the end, they appreciate the fruits of their hard work. Trust me, if it is a toy they will care for it.
- Provide a savings kit
They have understood what to buy in order of priority. Besides, they have the allowance yet it is not enough to purchase their toy. Provide a piggy bank as a way to encourage them to save to a point they get enough cash to buy their favorite play tool.
- Set a goal using the savings
You need to let your child know why s/he s saving. Is it for a favorite toy? Once you have agreed on it, it is important to get the price so that the child has a reason to save. When he is far from reaching the goal then he needs to save more money. The goal acts as a saving pacesetter.
- Become your child’s creditor
You can opt to be your child’s lender. Yes, it may sound weird but it works. It is the best way to work towards achieving their goal fast. Just like you do to a friend, bail them out and let them know that it is not for free. They have to pay for it.
- Be a role model in finance
As a mom or dad, you have to walk the talk. There is no way you want to make your child have a budget when shopping while you go for a shopping spree. You are the first financial management teacher for your child.
Lead by example. Let them know when you are saving, how you are doing it and further, what you are saving for. When they copy they know that it is something practical rather than just a theoretical ideology.
Give room for mistakes
Financial literacy is a practical approach to money matters. Give room for mistakes and use that as a learning tool. A financial decision that costs the child is a step in the right direction.
It makes them free with you when they also fail to achieve their financial goal. Use that as a learning point. With the mistakes, you can now get the best forum to educate them on the need to save.