Kids, Finances, and Money – Part 1
Posted on: August 23, 2019.

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Finances not only help us plan completely for our entire lifetime, but money habits also determine the quality of our life. Saving and prioritizing our cash resources makes it easy for big plans of purchasing or investing. But impulsive buying habits can, in the long run, handicap our comfortable living. This is why we need to teach our kids healthy financial habits from a young age. Hence, they will have skills that will translate well into adulthood.

It can be difficult to think of age appropriate ways of talking to our kids about money. And no parent wants to stress them out or make them feel cornered over their family’s money matters. But it’s better for kids to be aware of the costs of living rather than assuming mom and dad can get them whatever they want.

Instead of giving them an allowance, they can be helped to get commissions. A commission can help a child understand the correlation between work and money. After all, in the real world, we only bring home a paycheck, if we show up for work. We could set up a system in which our child earns a certain amount every time they complete a chore or help out in some other way. This will be an incentive to complete household responsibilities as well as help develop a healthy work ethic and a sense of accountability.

It is important for kids to understand that they simply can’t spend money on anything. If a child has a regular influx of money, it will create good habits to have him sit down and create a budget or at least keep track of their spending each month. Encourage them to spend only a fixed amount of money on eating, or entertainment, and ask them to contribute a certain amount each month, on say, paying up electricity charges.

We could ask kids to collect some spare change in a glass jar. The jar would provide a visual remainder of how much the child is saving up. Seeing the growing reserves of change in the jar will help encourage the child to save more. Getting into the routine of saving will help them develop healthy habits and they’ll become quite the saver by the time they’d move out of home.

When kids ask for something, parents may find it easy to say ‘NO’. However, this can be used as an opportunity to teach them about financial responsibility. Show them the price tag. Seeing how much a thing costs will help them have a more realistic understanding of the value of money. Not to stress the child or give him a sense of being deprived of something. Instead he/she has to know that the money has to go for something that is more important—like buying groceries or for domestic repairs.

Kids should be guided to save for whatever they want. They need to know the value of money and hard work, even if parents can afford to get them everything they want. Rather it will make them feel entitled and used to getting their own way with having money to spend. Encourage them to put away a part of their birthday money or their commission amount to buy something they have coveted to have for a while. They have to learn to wait for it.

…continued in the next part

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