5 Money Habits Children Should Learn
Did you know that children from three-year-old can comprehend the concepts of spending and saving? Not only that, but according to a University of Cambridge study, their money habits are often formed by the age of seven. According to the study, parents have the greatest influence on their children's financial habits.
Money plays an important role in your daily life, from grocery shopping to paying for gas. Helping children develop excellent money habits at an early age will set them on the path to becoming financially literate. This gives them a head start in life. Here are five suggestions for instilling healthy financial habits in your children.
5 Money Habits Children Should Learn
Teach Them To Save
Watching you spend money will be your children's first interaction with money. They notice you use it to make purchases, even items for them. It's important to let them know from an early age that money isn't just for spending; it's also for saving.
Saving money isn't merely a good habit to develop. Saving teaches patience, and patience teaches discipline. Teaching your children how to save encourages goal-setting and preparation. It also creates stability and independence.
Give your children a piggy bank or a savings jar where they can deposit coins or cash to help them develop the habit of saving and support them to do so. You'll probably have better luck encouraging young children to save for short-term goals — such as an item they truly want — than for the future.
Create Opportunities that Will Teach Them How To Earn Money
Children require their own money in order to learn how to make financial decisions. Allowances can help with this. However, you should consider asking your children to perform some duties to earn their allowance.
Because they are expected to help out as part of a family, some chores must be done without money. But to teach them the importance of making their own money, they should do specified responsibilities in order to be compensated. Paying your children an allowance for finished tasks achieves this while also teaching them the value of working for their own money.
Teach Children How To Make Smart Spending Decisions
Teaching kids how to make smart spending decisions gives them an appreciation for delayed gratification. One of the ways to do this is to give them some allowance and let them know it is all the money they can spend within a specific timeframe.
Some skills it will teach them is how to track their spending. It will also teach them how to budget. Learning how to budget now will help them when they enter the real world.
Teach Your Children The Importance of Giving
It's never too early to teach your child the importance of giving. If you have attempted to get your child to share with others, you know how difficult this can be. Giving has far-reaching consequences that extend beyond the playgroup and the schools. Generosity can pave the way for better health and various other advantages. According to research, the act of giving produces hormones in the body that can help with better moods, physical wellness, and longevity.
One way to accomplish this lesson is to ask your child to keep a portion of their allowance that they intend to give away. When they identify any cause or person whom they think deserves it, then you can ask them to give.
Teach Your Children How To Grow Their Money
You now know the importance of investing. Sometimes, you wish someone had told you earlier. You can start doing the same for your kids. Investing is the most popular way to build wealth.
Gradually familiarizing your child with how markets work will simplify the investment process, making it more accessible to them as they get older. Then you can teach them the fundamentals of risk and reward, stocks and bonds, and gains and losses.
As they get older, you can introduce them to shares and show them how to invest properly.
So What Are You Going to Do?
Teaching children excellent money habits can help them avoid making costly mistakes in the future. Because of the economic crisis, every parent should begin instilling excellent money habits in their children (from the age of three) in order to build a solid financial foundation.
This is why we at DABA Kids have put together a free financial literacy bootcamp to teach your child(ren) these money habits at their young age. Register your child(ren) here.