Ask your children to list down all the things they could do if they get a $50 or $100 bill for a day. You will be amazed by the answers. Even though you might have never talked to your kids about smart spending, kids figure out a way to set their priorities when it comes to spending their money.
But while kids know their priorities (candies! Toys! Computer games!) as consumers that doesn’t mean that they’re wise spenders. So, if you have been postponing the money management talk with your kids all this while, this is the right moment to teach them about personal finance.
There are many ways to break the ice and discuss money without causing your child to lose interest or perceive the topic as boring. Here are eight pointers on how to instill good spending habits in your child that would last for a lifetime:
- Listen to your child
Refrain from criticizing or chiding your kid for overspending or making the wrong buying decisions. Instead of scolding or arguing, you can make your point in an interesting way such as giving examples of a better deal or a better quality product that you have heard about from a friend or an advertisement. Ask your child’s opinion on such information and take the flow of the conversation towards proving your point with patience.
- Let your child “earn” it
Instead of handing over the allowance as a dutiful parent, make your child earn it. The tasks don’t necessarily have to be boring. You can hand over a combination of interesting and slightly uninteresting chores. For instance, you can ask your kid to prepare a list of her favorite songs for the weekend party, cleaning the garage and pepping it up with her very own ideas.
- Give a modest allowance and stick to it
Regardless of your financial status, the allowance for your kid should always be at par with the average allowance of the other kids at school. This would avoid rash spending habits and showoff or inferiority complexes in your child.
- Go interactive
There are many applications designed specifically for school age kids that can help them manage their personal finance. Some of them are quite educational and interactive. You can either buy these applications or even download some of them for free.
- Be a role model
Parents are the kids’ first teachers. To teach good spending habits and money discipline in your child, you need to introduce those habits to yourself. By working on your own money management and personal finance skills, you can set a great example for your kid to watch and learn on a daily basis.
- Shop smart
Go shopping with your kids. Get them to prepare the shopping list and make sure they understand that you will stick to it unless you have to buy something absolutely essential. Such discipline would help your kid avoid the habit of spending on unnecessary items just because they ‘feel like it’.
- Teach about social responsibility
Teach your kids about the importance of money, social responsibility and setting their priorities. For example, your child must understand that donating a dollar to the homeless charity is more important than spending it on unhealthy sugar candy.
- Buy a piggy bank
Keep a cute piggy bank or a fake fancy vault in your kids’ room which would encourage them to save a portion of their allowance and gift money on a regular basis. Discuss the target amount to be saved for the ‘grand spending spree’ by the end of a certain period of time. For example, your kid can buy that new Barbie set or a shiny soccer ball by saving a portion of her allowance for a couple of months.
Teaching your children about financial responsibility is a way to ensure their future. It’s one skill that they will treasure and give them a better life.