What can we do to strengthen children’s financial intelligence? How is our financial intelligence developed? The last lesson most of us received as children about finance is summed up in one sentence: Money is not bear grass! Of course, teaching financial management to children is still not very important, while ignorance about it can cause many problems for our child in the future. According to research, children can learn about the function of money from an early age and benefit from what they have learned! In this article, we will teach you 10 ways to effectively introduce your child to financial issues in a way that is beneficial for his or her future. The advice we provide is taken from financial experts who are parents themselves. Stay with us.
1. Explain where the money comes from
It is important for the child to know how to make money. He should know that money does not come out of Mom and Dad’s pocket like that! Our child needs to know that money is earned for work. We work and we get paid. If we do not work, there is no money. According to Rachel Cruze, a financial expert and author of Wealthy Families: A Generation for Financial Success, it is important to constantly explain to the child the relationship between money and work.
2. Remind them of these three principles: generosity, saving, spending
Once you know where the money is coming from, there are three basic principles: generosity, saving and spending money.
Generosity is very important; Because it teaches the child the importance of helping others. This is a precious feature. Then teach your child to save some of his money and spend some. Remind him that when the money runs out, it will not be replaced. Undoubtedly, the child makes mistakes; But how much better to make a mistake while under the safe roof of our house!
3. Ask the child to divide his / her cash into 3 categories
Children need tangible tools to understand abstract concepts. Therefore, do not just explain these 3 principles and provide them with the necessary tools to practice. Instead of 1 piggy bank, give him 3 piggy banks (you can use envelopes, empty glass and other tools) and label each one “forgivable”, “savings” and “spendable”. Whenever your child receives money (allowance, wages, gifts, etc.), encourage him / her to split his / her money into 3 pieces. Let the child decide for himself how to distribute the money.
This not only boosts the child’s confidence in financial matters; Rather, it provides an opportunity to have a serious conversation with our child about money management. Talk to your child about how he or she wants to spend his or her money, as well as how to divide it into different situations, such as in the event of an unforeseen event. But do not forget that the final decision is with him.
Tia Nicola, CEO of Wealthbar Capital Management, says of the trick:
My 8-year-old daughter knows she has to have 3 cash accounts. He usually saves on things like summer camp tickets or other things he likes to experience. He knows that the money spent is related to everyday expenses such as buying chocolate. We have also taught him the importance of money. He can donate his money to charities or others; For example, buy a gift for his friend.
4. Involve the child in the budgeting discussion
One of the best ways to teach children about finances is to involve them in discussing family budgeting. This is how they look at how we handle bills and bills responsibly. Children instinctively like to help their parents; So, they come up with ideas, and to see them flush it out, it’s really fun. These discussions should be intimate and stress-free; We can even discuss this at dinner. The discussion should include reminders to pay the bills or installments between us and our spouse.
It’s okay if your child is not old enough to talk. The goal is for him to see the family discuss financial matters without embarrassment or worry.
5. Inform your child about online payments
Accounts and books and payment of installments and bills are not a pleasant thing! We can change the mood a little by accompanying our little one. It may sometimes bother you; But it is worth a try.
We can pay our bills and installments by phone or laptop while our young lover is sitting on our feet, or we can visit the stock brokerage site and check the investment status. However, we must be careful not to press a button or touch an icon; But experience says that children enjoy watching our work. Many activities today are done in a digital form that is less tangible to children. But they realize that we pay by touching or clicking a button, and they are attracted to the process.
6. Give kids money as a gift so they can make financial decisions
Giving gifts on birthdays and other occasions is common. We can give money as gifts instead of gifts. In this way we save time; We do not have the hassle of choosing a gift, and more importantly, we help strengthen our child’s arithmetic ability.
Children are accustomed to asking for special gifts for special events such as their birthday. By giving them money as a gift, the child gradually realizes how much his requests cost!
7. Give money, but not unaccounted for books
Like everyone else, children need money to do various things, such as the cost of a school group camp. It is good for children to set a certain amount as allowance; But it is better to raise our child so that he can earn money on his own. It shows them how people make money.
“Nicola” pays her 8-year-old daughter to do some housework outside of her daily chores (we are not going to pay our children to tidy up her room, which is her job). Of course, we should not make the child expect to be paid for any extra work. Because when he finds a job, he stops doing housework. He should know that he needs to cooperate in doing housework.
We can make the allowance payment conditional on a set of tasks at the end of the week. If some work is not done by the end of the week, his allowance will be deducted.
8. Teach him how to spend his allowance
The child should know that although he can spend some of his money on fun and entertainment; But it must also devote part of it to meeting some essential needs. As time goes on and children get older, we can take this more seriously.
Specify what the allowance should cover; Expenses such as school meals, snacks, computer games, extracurricular activities, and school expenses. In the case of older children, we can add clothes or other important items to the list. Always write these things so that there is no room for doubt and misunderstanding.
If you know your child’s savings are approaching what they are looking for, it is a good idea to give them some extra money! This will make the savings more enjoyable for him. Also, encourage him to spend his money to add to his savings.
9. Use your child’s sabotage to educate
It happens to many mothers and fathers that their child spends all his money to buy chips and puffs and the next day he expects mom and dad to buy him puffs. what should we do? Do not! Instead, divert your thinking to good things in life.
Explain to the child that when the money runs out, it’s gone! It may be difficult for you; But in the long run, you teach him to act on what he has; This is a key issue in money management.
10. Monitor your money management methods
Children are constantly watching our behavior and learning. If we are extravagant, spend more than we have, and constantly worry about money, the children will follow suit and conclude that money is a scarce thing that is very important!
If we spend more than we earn, kids will think this is a natural way to manage money, and everyone will do the same. If we are constantly worried about running out of money because of misbehavior and spending, our child will follow suit. As mothers or fathers, we can set a good example for our children by correcting ourselves.
Do you talk about money and financial issues with your children? Do you consciously teach your child about this? What other ways do you think can help raise children with higher financial intelligence?