Kids: Here are three ways you can teach them about managing money.
As parents, it’s important for us to help build into the young lives of our children the skills they need to thrive as they transition into adulthood. While the list sometimes feels endless, we’re taking one item out of it today – money!
In this article, we’re listing a few simple tips from the Citrus team that we know work and help. We hope you find them useful! Let’s take a look.
1. Give them visual proof of progress.
It’s important for your children to be able to see the progress they make in their saving efforts. One of the most common frustrations people report around saving, whether young or old, is how intangible it can be. Nobody likes the idea of throwing money into an invisible pit, and this fact applies more the younger a person is.
Consider simple things like using a clear glass savings jar on a weekly basis. Show your children how it fills up, encouraging and exciting them along the way. Once every month or two, you can then take this physical money and reward them for visiting their bank to deposit it – a great opportunity to go to the ‘next lesson’ in finances.
2. Use incentives to teach them about opportunity cost.
Most adults could do with a lesson on this one! Opportunity cost (the loss of alternative things when one thing is chosen) is a serious subject indeed, informing a smart spender’s purchases in the right way. Understanding opportunity cost helps us delay gratification and can be the key to waiting for the purchases that truly benefit us and make us happy in life.
For kids, it’s a lot to ask for them to simply delay purchases – especially when they’re really excited about something! To make things easier, give them explicit bonuses to their savings whenever you recommend they hold fire on buying something. If they want item A, tell them hat by waiting you can help contribute to their piggy bank so they can get the much better item B.
You can make the teaching of this phenomenon even better by again combining this with physical money. If they make the right call at the right time, reward them by counting out the additional pocket money they’ve earned.
3. Help them increase their own incomes.
While saving is important, it’s one side of the coin where money is concerned. Financial success comes not only from trimming costs but from increasing one’s income. This is a very important and often overlooked lesson!
You can teach this to your children at any age. Earlier in their lives, you can encourage them to look for ways around the house and neighbourhood where they can help others in return for pocket money. Are there lawns to be cut? Does the house have an area where things are getting messy?
This is a valuable opportunity to build excitement into the process of their education on money. It’s lovely to see the look on their faces when they get more pocket money than they thought they’d have, and it’s a great way to help encourage them to look forward to benefiting others.
As your children get older, you can take this a step further in sophistication. It can even be an opportunity to teach them about entrepreneurism and how to start a business! The sky is the limit and the subject of improving income should always go hand-in-hand with the truths of saving maturely and effectively.
Thanks for reading!
We sincerely hope today’s Citrus blog has been useful to you! It’s a busy life being a parent, but it’s undeniably a golden opportunity to teach them about the skills that will massively benefit them later in their lives.