As a parent, there are so many essential things that you must teach your child including how to communicate with others, how to learn about different things, and how to eat properly. However, one lesson that is often overlooked but is just as vital is educating your child about money. Sharing with you some of the things that I shared with my own daughter about money.
Money in relation to Time
One thing that many kids don’t grasp too easily is that money isn’t just an abstract concept. In fact, the value of money has a direct (if fluctuating) relation to time. Indeed, giving up our time to work is how most of us earn our money, and helping your child to understand things from an early age can provide them with a healthy respect for both working and spending.
With that in mind, start by exchanging pocket money for chores completed. Write out a chart with the value of each item next to it and as your child gets older you can let them choose what they want to do that week, depending on their need for money or time.
“Saving it” is good
The next lesson that every child needs to learn about money is that saving it, rather than spending it as soon as they get it is oftentimes a good idea. During these years of their lives, it’s good to teach them this discipline of creating a habit. Of course, when they are very young you can help them get into savings by getting them a piggy bank, or opening them a bank account.
Later on, you may encourage them by matching the amount they save each month. There are even money management apps that allow parents to get a notification when their child spends or saves, which could be very useful here too.
“Investing it” is better
While saving is good, teaching your child about investing their money is a crucial lesson if you want them to have financial stability in their future. However, it is vital that you cover all the investment options such as stocks and bonds, Forex Trading, crypto currency investing and even property investment, as well as the risks involved. Above all, helping them to understand compound interest, something you can do with toy coins or bricks can be a lesson that proves valuable throughout their lives.
Keep track of their spending
Another essential lesson that every parent must teach their child is how to track and manage their finances. The good news is that doing this is so much easier and more fun than it used to be because we are no longer reliant on pen and paper ledgers. Instead, there is a range of apps that offer an easy-to-read visual display which can be much better for kids as they learn to budget.
Do good with your money
Last of all, to set your kid up for a happy and healthy future, it’s vital that you educate them on the power that money has to do good. Indeed, there are many opportunities to do good in and for the world by offering financial investment or support.
In particular, giving regularly to charity, something that it is a good idea to model for your children in your own life.