Children are the future. They watch and learn from everything their parents do from proper etiquette to healthy eating habits. It is never too early to teach your children the importance of money. Teaching your child about the concept of money will help them as they grow and mature through their journey of life.
It is important to talk about the subject of money at an early age as children will always ask their parents for something. Nine times of out 10, their requests will have financial implications. Their requests will include anything from toys to candy. How you respond to their requests as a parent, will help or hinder your child's outlook on money. If you are the type of parent who uses your high interest credit card every time your child wants something, even when you know you are struggling to keep up with your monthly credit card payment, you better believe when your child grows up - they will do the same. However if you create a healthy relationship with money at a young age, your child will avoid living a life managing a heavy debt load.
To help you teach your child about money, here are some easy-to-follow tips to get the money conversation going:
There's a cost to that
Have you ever taken your child to the store without them asking for anything? Of course not. Children will ask for anything and everything they see in their sight. If you are tight for cash or simply do not want to buy your child another toy, it could be a major power struggle. However it is important to teach your child the concept of money so they understand, toys and candy are not free. There's a cost to it.
To help your child understand the cause and effect relationship of money, take them to a grocery store (a toy store may be too risky and lead to a major meltdown if your child is young) and show them how much money it would take to buy some groceries. You can keep it simple and tell them how much a loaf of bread costs vs. a box of their favourite cereal. When you bring your purchases to the checkout counter, explain to your child how much the bill costs, give them the cash to pay for the grocery bill so they understand in order to receive their favourite cereal - there's a cost associated with it.
Do you want a new toy?
Teaching your child how to budget may take a little time and patience however it can be done! It is important not to get discouraged and work on it by using real-life examples to help your child grasp the budgeting concept. Take your child to your local store and bring a shopping list, do your very best to stick to the items on your list so you will stay within your budget. Discuss with your child the following:
•What is the purpose of the list while shopping?
•Talk about the items on your shopping list
•Explain why it is important not to stray from your shopping list
Also show your child how much money you are carrying with you in your wallet. You can also take the opportunity to explain what would happen if you purchased more items than what you've budgeted for.
When your child starts to understand the concept of money, you can give them a monthly allowance to help them save for a new toy or clothes. This way they can start to understand items in the store are not free, you have to pay for them. If your child wants the latest Thomas the Tank Engine train set, explain to him or her, how much it costs and how much money they would need to save up to buy it.
Do you need or just want it?
Just like the concept of budgeting, this will take some work especially if your kids are young. After all, what child would not want a brand new toy or large stash of jelly beans? Children naturally want this and that item however as a parent, you need to explain, money does not grow on trees. Besides if we bought everything we wanted, our wallets would be in need of some serious financial intervention from a trained credit counsellor.
Talking money with your kids will be an ever evolving process. The most important thing is to be patient with your child as some children will understand quicker than others. Creating a healthy relationship with money when a child is young will create a lifetime of smart spending decisions.
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