Tips To Train Your Children For Handling Money Wisely

Financial skills are an important asset to have by your side. While most adults navigate through life without knowing how to manage their finances properly, they do not go very far. That is to say, even if adults are getting by, it does not mean their finances are in order. We do not have much to blame except for the entire school system. If children were taught about the value of money from an early age, they would grow into sensible adults who understand how to handle money. But since this is not the case, there are many issues when kids become young adults. From living without parental supervision to making their own money, there are so many things kids do not learn organically. 

Despite the flaws in our education structure, as a parent, you have to take on this responsibility. You have to make your children understand the importance of financial lessons from an early age. This is to ensure that in the future, they know how to handle their money well. But how can you accomplish this?

The Issue with Money and Children

When you consider the many economic crises we go through globally, it is a wonder that the average adult does not know their finances. From immense debt to a lack of savings, the struggle is endless. What we can do is make a change for the younger generations. Teaching them how to save and encouraging good spending habits are some ways we can preserve their future. You can also adopt some other age-appropriate methods to teach them the value of money. But since young kids seldom listen to their parents, what should be done? 

To prepare your kids properly for what is to come, here are some tips that will help their training:

Opening Up a Bank Account

Buying your kid, a piggy bank will no longer do. You keep your child's money saved, and you should open up a bank account for them. While this will be a savings account where you will deposit cash, you need to make your child understand its purpose. Let them count the amount of money you put in, and then tell them how interest works for banks. You can even give them a kids bank card as a source of motivation. This will make them feel like responsible adults, and your job will be easy.

What They Want is Not What They Need

This is a concept that parents often fail to discuss with their children. When you try to teach your children what the value of money is, you have to distinguish between desires and necessities. You have to explain to them that basic things are required to live, like food and shelter. Then you have to establish further that other things are merely luxuries in life, such as games and new iPhones. You can use examples to make them understand how the idea of spending works at a very early age.

Giving an Allowance

You should give your kid an allowance each month. Coupled with this, you need to let them make their own choices on how they should spend their money. As long as they understand that they can budget and spend a small number of toys and Happy Meals, your job is done. You can annually raise this value to help them understand how the real world works. If they have any reasonable requests, then you should listen and respond accordingly.

Smart Spending

The issue is not whether kids spend too much or too little. It is what they are spending their money on. If your child wants a new video game immediately after its launch, make them wait. When the price eventually drops, then tell them to make a purchase. Smart spending is all about timing and the brands you want to give your money to. Having kids understand what most adults still struggle with is a massive win for their future.

The Art of Negotiation

When it comes to negotiating and bargaining, your child should know their place. They may request a raise in their allowance or ask for extra spending money for a movie. The issue is not that you have to say no to them. Instead, hear them out and make a decision based on how reasonable their demands are. Do not let them emotionally manipulate you into a big purchase, but a few dollars here and there will not hurt. Once your child learns how to negotiate, they will never have a problem at retails stores later in life.

Setting Goals

There is nothing wrong with setting a few goals here and there. Ask your child to have a long term goal for their money, whether it is a toy or some new sneakers. Take a look at the price, and if it is within the budget, you let them save up for it. The constant waiting will teach your kid how long term goals work and how difficult they are to achieve. If your kid can do this easily, you are setting them up for success.

Leading By Example

You can employ all the techniques in the world, but kids do not learn unless they see it happen. As parents, you need to lead by example and restrict your spending habits like your child. This teaches them that adults are

Track Spending

Finally, as the last step, you will have to track the money that is being spent. Whether it was minuscule or a heavy amount, it does not matter. When children are saving up to reach their goals, they also have some regular expenditures. Teach them how to cater their allowance accordingly and make them keep track of what they spend each month. You can use a spreadsheet for proper tracking or apps, depending on your preference.

The Takeaway

Parents love their children and what to provide them with everything in the world. But while love is a driving force for such an action, it is simply not practical. Too many material items make children spoilt and entitled, which turns them into similar adults. To avoid this and raise a sensible young person, follow the given tips and implement them on your child. What works for one parent may not help another, so there is no shame in trying different techniques. Just remember to focus on saving and keeping their spending habits in check.