School teaches how to count, but not much on money saving skills. It is never too early to teach financial skills and it does not have to be too strict.
Since parents are the most influential in children’s lives in the early years, you must wisely use activities to create a future of saving and giving.
Share this Image On Your Site
Teach these money lessons to your kids!
For toddlers up to 5 years old – Sometimes you can’t immediately buy the things you want
The lesson to be learned at this stage is “patience.” There will be times that you can’t immediately buy what you want. This is why housing loans and car loans have been created. And even with these loans, you still have to save up for the downpayment.
Kids at this age will learn that they have to save up for something they want. There are stories when parents take their kids to store to buy something. Kids expect that when they are taken in the shop, a treat will be bought for them. They might see something they want, but this does not mean that it will be immediately bought for them.
When you wait in line, discuss the importance of waiting. This teaches that they have to wait for their turn.
At home, have three jars marked SAVING, SHARING and SPENDING. Every time your child receives money as a birthday gift, and bao or a reward for house chores, ask your kid to equally divide the money among the three jars.
The Saving jar will be for something a bit expensive but achievable, the Sharing jar is for someone you know and the Spending jar is for small expenses such as candies and snacks.
Let your kid set a goal like a toy, but make sure they can afford to save up for it so it won’t be frustrating if the savings get too hard. Remember that the goal is teaching how to save up, and you want them to know the rewarding feeling of finally getting what they want after saving for it.
For 6 up to 10 years old – Make choices about how to spend the money
Stress the importance of spending wisely as being financial saving is not all about savings. Being financially intelligent is also spending wisely. If you go shopping with your kids, discuss how you choose the product you buy. Teach them that generic items may be the same with the branded ones, but they are cheaper.
During shopping, give them some money and let them buy something for themselves. Ask them if they can find similar items at a cheaper price.
For 11 up to 13 years old – The earlier you save, the faster your money can grow
After teaching how to save up, you can shift your lessons to investments. This is for setting up long term goals. Start by discussing compounding interest with specific numbers. You may use illustrations because this can be a bit tricky for young minds.
Make it clear that compounding interest is earning interest from the money you saved. It simple words, your saved money is growing.
Let your child use the online compound interest calculators. The calculator will serve as your illustration. Then let your child set a more expensive goal than the previous ones such as a toy. You can help your child open a bank account and show how much interest can be earned in a year.
For 14 to 18 years old – when considering college, be sure to compare how much each school costs
This is the time when you need to teach your children about choosing the college you can afford. Be honest on how much you can afford, but also encourage your child to look into offered financial aids, grants and scholarships. This way your children can create realistic goals.
There are various ways to finance college education. If you start talking about this with your ninth grader, you can make a plan together. How much loan will you need? Which scholarship can your child take? Will your child be willing to have part-time jobs?
For 18 and up – Use the credit card only if you are sure to settle the bill on time
At a young age, it is easy to slip into credit card debt. Credit score has long term effects. Your child must know the importance of credit history and the burden of losing control on spending habits. If you cosign your child’s credit card. Teach your kid how it will affect your credit score should there be late payments.
Look for a credit card together and consider the ones with low-interest rates and no annual fees. Teach your kids not to use up the credit limit for everyday expenses. As much as possible, charge on the credit card the emergency expenses.
Financial behavior is not easy to shape up. It takes years of practice, patience, and self-control. Teaching your kids how to save and spend wisely is a gift that they can use to their advantage for the rest of their lives.
Latest posts by Cash Mart (see all)
- 5 Questions to Ask About Maybank Personal Loan in Singapore - April 27, 2017
- Can You Really Save Money When Buying a Used Car? - April 26, 2017
- Valuable Facts on Standard Chartered Home Loan in Singapore - April 24, 2017
- Citibank Business Loan Limitations You May Not Know - April 19, 2017
- 3 Non-Bank Alternatives to Standard Chartered Business Loan in Singapore - April 17, 2017