Many of the problems we are facing today could have been avoided if our parents and grandparents took the time to teach this generation a thing or two about managing money.One important lesson that should have taught is the importance of spending only what you earn, because the current crisis was brought about by credit cards and taking a mortgage beyond your income level. The following article by Esteri Maina gives us tips on how to teach kids the importance of financial planning.
Countless parents pay a lot of money to assist their children acquire the best professional training, but forget to forfeit the little essential to help them acquire the skills of managing their education payback salaries. Financial decisions are almost attached to every aspect of our lives, and this is what makes financial literacy very important to both parents and their children as they grow up.
Why teach your kids about money
There are several benefits a child can gather from being wise on money matters, some of which my include the following.
- Children can administer their own incomes that parents provide now by spending on necessities while avoiding extravagance.
- A child will value savings and investment decisions. Money matters education along with parent’s intervention on the child’s financial use enables him or her to think, and take action about tomorrow.
- A child becomes independent when still young. How many parents have brought up grown-ups who remain parasites even when it is obvious that they should be out of the nest, and facing the world on their own?
- Children who grow up understanding that earning money requires handwork, determination and smart spending and saving decisions, can be said to be self-sufficient.
- Becoming an entrepreneur is thought out to be inborn for some people while others are made.
- Your child could later become his or her own boss in a business and if they will be financial literate then, it will make them strategic business and money planner
Simple ways a parent can use to train kids personal finance
- Soon after he/she learns counting, introduce them to money. To do this, parents need to be patient with the kids as they take these lessons. Normally they understand fast by observing a repeated money lesson.
- Open up your own money values, saving it, growing it, and most notably spending it and this means as a parent you need to consider how well you master your own finances.
- Assist them in making distinctions between needs, wants and luxuries. Not understanding these ends up in overspending, and really bad debts even to the adults.
- Emphasize on setting spending goals every time kids request for money, or items, to discourage impulse buying; in other words, let them learn the process of budgeting.
- Initiate the principle of savings against spending. and demonstrate how swift money grows. This will begin if you showed them how to list their needs in order of priorities and emphasize on spending based on urgency not luxury, when cash is limited. Involving them in shopping will sharpen spending skills more.
- Allow them to participate in opening their own bank saving plan by letting them accompany you there. Some parents open many of such plans on behalf of their kids, and say nothing until a time to join college comes.
One way of raising a completely responsible child is by leaving them to be vulnerable on financial issues, and without you around, they will find a solution to the problem. Let them participate to such easy tasks as opening bank accounts, applying for credit cards, college loans, and the like, only come in if they need any clarifications. Keep your distance and allow your children make their financial decisions on their own, whether good or poor. The bad ones motivate them to be careful with money tomorrow while good ones mean they are progressively getting on track on their own.
One way you can enhance this process is by all means training them how to keep track of the money they have spent, invested or saved by maintaining good records. Paying a personal finance management course for your collage going child or talk them into paying if they are already done, and independent is the best decision a parent may never regret why they made it.