Nothing feels quite as triumphant as raising a responsible kid. It takes a lot of work and nurturing to instil the right values in your child, especially when it comes to the matter of financial literacy. But when it works out—it can be very rewarding!
That said, teaching your kids about financial matters at an age-appropriate level can be quite challenging. In fact, many fully-grown adults struggle with budgeting money, what more the impressionable youth?
We’re not saying to expose children to real-world financial problems like debt and bills at a tender age. However, slowly introducing them to core financial concepts in their younger years can help provide them with valuable, real-world lessons that they can carry into adulthood.
They don’t only get to benefit from these learnings in the future. They can adopt them as soon as they learn them—granting your family the opportunity to keep more money in your pockets, even if it’s just a little bit.
Ready to help your child become financially savvy? This guide will give you six tips to raise them with the skills that can help them handle money at their age and beyond.
Let’s jump right into it!
1. Teach Delayed Gratification
Delayed gratification is an essential life skill that should be taught at an early age. In today’s fast-paced world, the convenience and pleasure brought about by technology and general advancements have normalised immediacy and getting things done in the here and now.
This has caused an attention span epidemic—where swaths of people across generations have become more impatient and entitled to current pleasures and desires.
With how easy it is for your child to pick up this habit, it’s essential that you empower them to control their impulses by promoting the value of delayed gratification—a concept that involves the delaying of a short-term and tangible pleasure in favour of completing or accomplishing a less fun task.
You can apply this concept in the household in several ways. For instance, you can delay your child’s usage of their iPad or gaming console until they get some chores done. Alternatively, you can give your child ice cream only when they eat their plate full of steamed vegetables.
You don’t want to apply this concept without them knowing.
When your child starts to question why they should do this before doing that, teach them about delayed gratification and how it applies in real life. For instance, you can highlight the fact that they can achieve long-term purchasing goals if they save up little by little over time.
By doing this, you’ll be setting them up in a way where they’ll be more in control of their money and not the other way around. This can be beneficial to them for years to come.
2. Provide a Strict Allowance
Don’t let your kids view you as an endless wallet. Instead, instil financial responsibility on your children by giving them a strict allowance.
An allowance helps establish clear financial boundaries for you and your child. This can be a good way to get them to practise budgeting and saving—essential money-management skills that are useful for both children and adults alike.
The amount of allowance you give should be enough to cover daily needs, such as lunch money and transportation costs. But it’s also beneficial to slightly increase their budget for some leeway.
By doing so, you increase their chances of having money left over from the week, which can be an excellent teaching experience for concepts such as saving up for something better.
3. Encourage Saving in Small Steps
Building good money habits can be hard for spirited children, but there are ways you can make even the most indulged child be more intentional with their money.
For starters, begin by encouraging your child to save the spare money left over from their allowance. Motivate them to put money in a piggy bank or savings jar before spending it on fleeting temptations.
Additionally, teach your child about how their savings can contribute to the family budget. Lay out your thought process on different financial decisions you have to make to support the household—like why you’re not spending your entire wage on a TV you say you really want.
Above all, be patient with them. Any gradual attempt to save up from your child is progress, and you should give praise in their attempts to keep their money. This way, they’ll feel more incentivised to save—the ramifications of which will be appreciated in years to come.
4. Give Them Responsibility
It’s important to emphasise the importance of hard work to your child—and one way of doing so is by giving them responsibilities around the house that are age-appropriate.
This not only improves their self-efficacy, but it also is a wake-up call for them to realise that you can’t breeze through life without some level of hardships.
You can start by giving them responsibilities around the house. Teach your toddlers to pick up after themselves by putting away toys, placing dirty laundry in the basket, and making the bed.
For older children, teach them how to sweep, vacuum, wash clothes, mop the floors, and wash the dishes and utensils. Teenagers need to learn basic life skills like mowing the yard, recycling trash, and supervising their younger siblings.
You may consider giving your child some reward for completing the day’s chore (not necessarily money). This shows your appreciation of their work. But don’t overdo it as it can foster a feeling of entitlement.
If you want to instil responsibility outside a house setting, you can consider helping them set up a lemonade stand or garage sale outside the house. Accomplishing these tasks helps provide them with real-life business and communications skills, which can be carried over into their older years.
5. Open a Bank Account
Another excellent way to raise a financially savvy kid is by introducing them to the world of money management through banking.
Teach them how depositing and withdrawing money works, how they can monitor their account balance, and the concept behind interest rewards.
Opening a bank account aids them in learning how money is stored in the real world. They’ll learn about it eventually, but assisting them in this journey early on provides a good head start.
Furthermore, having a bank account also encourages them to save as they can see their balance go up and down depending on their transaction activity.
Many banks provide kid-friendly bank accounts that you can consider opening for your child.
Besides a bank account, you should also consider opening a time deposit account and teaching them about it as a means of passive income and long-term funds.
In setting up bank accounts, you can set them up for future milestones, like a university education or a birthday party.
6. Lead By Example
Children are like sponges; they tend to emulate habits based on what they see. If you’re the parent, it’s important that you lead by example and demonstrate positive financial behaviours in your own life.
For instance, show your child how you budget your groceries. This can show them that you’re careful with your spending, which can help them form a similar habit.
Conversely, if you’re the type of person who always makes excuses for impulsive spending, your kid may rationalise their own purchases too—causing a fast loss of cash.
As such, it’s important to be a role model and act upon the principles that you teach. This will make your kid more likely to adopt and maintain these habits for life.
