Top 5 Tips To Teach Kids About Money Management

In this modern age, the importance of money management cannot be overlooked, and it doesn’t come easy either. However, in the traditional educational system, financial literacy is often understated, leaving most adults to suffer the challenges of personal finance. 

According to a recent survey conducted by the National Financial Educators Council, only 24 percent of millennials show financial literacy. But what if the values of money management were started earlier? The picture would be completely different. Thus, there is a good reason why parents should focus more on teaching money management habits to their kids from a young age. And by financial literacy, we not only mean making them learn practical skills but also instilling a mindset and responsibility. 

Read below to explore the top five tips on how you can teach your little ones how to value money.

The truth is, younger kids have a tendency to demand things that exceed their limitations. You can use this opportunity to encourage them to save up for that thing. Savings are a great approach when it comes to inculcating the habit of valuing money. Whether it’s opening their savings account or even buying them a piggy bank, it’s always a good idea to save up some cash. Even if it is as little as ten percent of their pocket money, every penny counts. 

Especially when your kids stay far away to study at a college or start off with their new jobs, helping them set a monthly budget will play a big role in managing their expenses, savings, and investments. And most importantly, when your little one has never lived away from you, it's always easier to get caught up in the unforeseen expenses of every little need.

Warren Buffet says, ‘If you’re not investing, you’re doing it wrong’ and this saying goes true. Therefore, it is important to teach your child the value of investment from a young age. Though the complexities of investing can be overwhelming for younger kids, it's good to make them understand the potential of investment in multiplying their money over time.

The very basic aspect of valuing money is to understand the difference between your needs and demands. While the necessities are food, clothing, and education, your wants are all the additions in between. Whether your kid likes the latest smartphone or a new bicycle for himself, it’s all the extras. The primary goal must be to focus on saving money for future needs rather than splurging on unnecessary demands.

Kids are like clay, and thus, parents should set their own example when it comes to teaching values to younger kids. Whether it’s money management, healthy eating habits, or anything in between, always prioritize leading by example. So, when it’s about financial literacy, let your kids know that your acts, such as savings accounts, emergency funds, or other investment plans, contribute towards securing your family’s future.

Amidst this financial learning, don’t forget that your kids are still young and there’s a possibility for mistakes. Let them navigate through their own mistakes and make them ready for a financially secure future.