Financial education can help your child develop healthy money habits. Finance should be an essential part of our education system, and it is currently a pending subject in most schools. Children need to learn how to budget, save, invest, and manage their money from a young age. Money management can help your children to be safe and secure throughout their life.
Here are a few ways you can educate your children about healthy financial practices.
Teach them the basics
When your children are young, teach them about the basics of finance – for example, what money is and how much things cost. You could ask them to cut up coupons when going to the supermarket and talk to them about saving money. Once they get a little older, you can explain the difference between cash, credit, and debit cards.
Pay them for chores
Your child needs to learn that money has to be earned. Instead of giving them pocket money every week, ask them to do household chores and pay them for their hard work. Hopefully, they will learn the value of money and be a little more careful with it. If your children have been putting in extra work, they could negotiate a salary raise or bonus payment.
Set a saving and budget target for them
When it comes to money management, budgeting is an important skill that every child should learn. As they get older, they need to learn the difference between essential and variable spending. For example, rent is a necessary cost while a holiday is a variable spend. If they want to have more ‘fun money’, they need to save it overtime to afford holidays or new clothes.
Open a bank account
Once your child has learned the basics of money, it’s time to open a bank account with them. You could open a children’s bank account and deposit their ‘wages’ into that account. There are now child-friendly cards that have no interest or minimum spend. They are designed to teach children about money management and have saving and investment options too.
Older children need a debit card that they can buy things with. A pre-paid debit card provides financial freedom while also allowing the parent to set the maximum spend so they can’t go over budget. You can monitor their spending habits and give them some advice on how to save.
Money is a complex subject to teach your child, and most of us don’t like discussing it. As your children get older, it’s essential to communicate openly with them about money. They should feel comfortable asking you for money advice and how to handle financial difficulties. Educate your children about money from a young age and encourage them to learn healthy financial habits.