"Money doesn't grow on trees."
You probably heard this nugget of wisdom a thousand times as a kid. And that was probably the only financial literacy education you got from your parents as a child, right? And now maybe you are struggling with teaching your kids about money.
If that's the case, you're not alone. According to a study by Financial Health Network, only a third of American adults are said to be financially healthy. The majority of us continue to struggle to make and manage money.
Experts warn that unless parents teach their kids about money early, they're more likely to repeat the same mistakes and suffer similar consequences. So, how can you teach your kids about money in a more fun and memorable way?
Here, we share five important questions that make the entire of teaching your kids about money process practical and unforgettable.
1. Where Does Money Come From?
Many parents ignore to make their kids understand their sources of money. As a result, kids erroneously assume that money comes from their wallets.
But if you want to raise financially smart kids, start by teaching them where money comes from. Help them know that money is earned after working. And if they don't work, they don't get paid.
Once they understand the relationship between money and work, move to part two.
2. Why Teach The Three Basic Principles Of Money?
After answering where the money comes from, it's time to focus on the three principles of managing money-saving, spending, and giving when teaching your kids about money.
Encouraging your child to set aside money for rainy days helps them prepare for tough times. This will help them be mindful when spending money. Also, it will help them realize that once the money is spent or given, it's gone. But don't stop there.
Teach your kids the importance of giving. It will help them see the impact of helping others. As they grow up, they will make mistakes. However, they should make those mistakes sooner while under your roof.
3. How Can You Make Piggy Banks More Effective?
Children need tangible ways to digest and understand abstract concepts like how to save money. So it's wise to do more than explanations. Give them concrete tools like piggy banks for practice. And that's not all.
Most parents give their kids only one piggy bank per child and hope it's enough. But if you want to be more effective, give your child three piggy banks- for saving, spending, and giving.
Every time your kids get some money, allow and encourage them to split the money and put them in all the three piggy banks. The aim is to allow your child to decide how to split the money based on what they want to do with it.
Apart from giving you a great opportunity to talk about money, this exercise builds your child's confidence in money. And if a situation arises, don't hesitate to ask your child what they intend to do with their money and how they could benefit more by splitting it differently.
4. What To Do If You're Not Doing So Good Financially?
Kids are constantly observing parent's behaviors and relationships with money. And they're absorbing it more than parents think.
If you're spending beyond your means or stressing about your finances, your children are probably learning and picking up on your situation. If you don't work on your relationship with money, they will easily assume money is a scary, stressful, and scarce thing.
So instead of beating yourself about the situation, find ways to change things for the better. This way, you will lead by example and prepare your kids for success financially.
It's never too early to teach your kids about money. And contrary to what many parents believe, teaching your kids about personal finance doesn't have to be complicated or boring. Use these questions as a basis to make your next lesson more fun, memorable, and practical. And if you discover more useful tips on teaching your kids about money, share them with us. Good luck!