Monday, May 14, 2012

Mother Knows Best: 5 Ways to Teach Your Kids about Money

There can be different opinions regarding the right age for children to start receiving financial lessons. Debates apart, it is true that financial lessons are not solely meant for grownups. You essentially do not want your child to arrive at worthy portfolios and investment plans when he/she has just started grasping the ABCs of school life; but you certainly want him/her to understand the importance of money (or at least what role it has in living). Beginning early is never harmful, although you need not overburden your child with all the economics of wealth and money.

Mother is the obvious mentor
Mothers can possibly teach impart the skill best owing to their innate ability to handle the budget plans which, more than often, go topsy-turvy. Children imitate their role models, and mothers serve as the obvious mentors. With all the budgeting, saving, investment and vivid economics entailed by lifestyle, mothers emerge as the best teachers with hands-on experience on the subject.

Mothers can adopt the art of progressive teaching and provide ample practical occasions to kids for experiencing financial lessons.

Help your child get on the right track
Regardless of the age you choose for imparting financial learning, you need to recognize that one of the best ways to teach kids is by actually doing it. 5 helpful techniques which can help your kids drift to financial track have been discussed here.

1. Give tender lessons and start early
Usually, the four year olds can count and recognize numbers. This can be the right time to start introducing concepts of an allowance and spending (if not saving). Starting early gives you flexibility and your child better understanding of the idea of money. Children are anxious learners; if you can deliver the right learning, you can expect the best results.

Provide simple lessons like denominations and their significance. Make learning sessions easy, fun and friendly.

2. Teach one lesson at a time
Children are neither supposed to become skilled financial planners nor compete with contemporaries regarding their general knowledge on money. The learning is supposed to help them emerge as able decision makers as they grow towards adulthood.

Your goal should be to teach one lesson at a time and turn to the next one when the time is right for it. Wait till they learned the skill, and then move on to the next. When you give them control over money, you would want to give them ample learning opportunities before they emerge successful. They may initially upset your budget and ‘waste’ money. Be patient as they will learn through trial and error.

3. Lead by example
Theoretical teaching is overpowered by practical learning. Just as you did mistakes in childhood, allow them to do mistakes. A child learns best by setting a good example. And actions speak louder than words.
A very encouraging method of promoting financial awareness among kids is by accompanying them to your bank visits. They may bombard you with non-stop questions but you would find yourself more than happy to answer them. You may also open their accounts and deposit their birthday collections (or part thereof).

4. Set goals to save for money (goals)
Teach kids about creating a budget. It need not be as complex as your house budget; you can create a simple budget to teach them practical financial solutions. It can teach them to plan their spending, instead of having a lump sum amount into their account which gets reduced each passing day/weekend/month.
If your child wants to buy an expensive toy, enable him/her to save for that toy entailing months of planning. This will not only teach your child the economics of money but also increase the worth of the toy. It takes sustained efforts to get kids on track; but once they are on track, they can engage in elaborate financial planning and budgeting later in lives.

5. Turn opportunities to advantage
There are abundant learning opportunities which can be utilized to your advantage. When going on a shopping trip, accompany your child. This can bring him/her closer to the realism of money. Spend smartly at grocery stores, comparing unit prices and buying bigger packs which are cheaper and can minimize wastage of resources (like packaging). Help them analyze the value, quality and other consumer concerns when spending money to realize it’s worth.

Plan economical meals and use leftovers effectively. Do not buy in haste. Spend in a planned manner. Regular family discussions on money and financial planning can engage kids (at their levels). When using credit cards, you can explain its functionality and worth.

Instead of waiting for the opportune time, create an opportune time. Wanting children to have worthy money sense and fiscal responsibility can be comprehensive job. However, this teaching has to be imparted only once and rejoiced for lifetime. The payoff will be a whole generation of kids who are aware of their financial abilities to save and spend.

About the author: Diana Maria is a blogger by profession. She loves writing on technology. Beside this she is fond of Gadgets. Recently an article on ecofriend attracted her attention. These days she is busy writing articles for born rich


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