Money has always been a tricky topic. Parents who wish for their children to have clear and sound ideas about money should make sure that their children hear about it at home.
Teaching your kids about money will help them get the relationship between saving and spending, have an understanding of the value of money, and develop good financial habits along the way.
There are many ways to teach your children about money, but here are five things you can do to raise financially smarter children:
Start them early.
Children are primarily influenced by their environment, so it’s good to start them on financial literacy early.
Teaching your kids about money doesn’t mean setting up a crash course on accounting for preschoolers. Make the learning process as natural as possible, by taking day-to-day activities and turning them into learning experiences. You can start with toys, like coin banks and toy cash registers, which encourage kids to learn basic math and money skills. Alternatively, you can also include the use of money when tutoring them with their math homework!
Lead by example.
Taking an active role in teaching your kids about financial literacy through baby steps will ensure big payoffs in the future. Seeing their parents splurge on a new gadget every month won’t help in getting kids to understand the value of hard-earned money, but having them come along to a trip in the grocery store where they can see the price differences of common goods may help them ask the right questions and infer the smarter financial decision on their own.
Teach them the value of delayed gratification.
As parents, it may be difficult to prevent your child from asking for something they want so badly—and that’s normal. But delayed gratification is an idea that children will have to be well-acquainted with. If your child wants to buy a toy, for example, explain to them how much money is going to be left in their savings if they buy and pay for the toy. By asking your kids questions like, or “Is it worth it?” or “How important is it to you?”, they can better evaluate their options and make better decisions. Coax them out of buying a trinket they just saw at the store and get them to save the money to buy a toy they’ve been wanting for months instead. Not only will they understand the value of money, but they’ll also likely play with the toy for a longer amount of time because they worked hard to get it.
Give them the power to make decisions.
After sharing what you can with your kids about handling finances better, it’s important that they take your lessons and apply them. Most parents give their kids piggy banks to try and encourage them to save, but BPI-Philam Life Assurance Corporation CEO Surendra Menon had a pretty unconventional approach.
He taught his then 9-and-a-half-year-old daughter about finance by giving her seed money for investing. He also gave her free rein over the stocks she wanted to invest in, in the process teaching her the importance of facing the consequences of her decisions. While he and his wife stood back and let their daughter take the wheel, Menon recounts seeing her become more observant about everyday happenings around her, learning to strategize ways to make the most out of her budget.
The moral of the story is not that you have to be a CEO to teach your kids about finance. It is possible to recreate this learning method with your kids, even on a smaller scale. In any given situation, encourage them to get to know all of their options, and after a thorough evaluation, have them decide on their own. This way, kids will learn firsthand the importance of responsible decision-making and being accountable for their actions.
Help them open their first bank account.
Introduce to them the idea of banking and how a having savings account is a secure way to keep and grow their money. When opening your child’s savings account, make sure to bring them to an actual bank, and have them meet some of the people who work there.
BPI’s Jumpstart Savings lets you enjoy the convenience of the Scheduled Funds Transfer facility which credits your child’s allowance from your enrolled BPI account to theirs regularly. The regular transfer provides you a worry-free means of ensuring that your child has allowance every day.
It is also especially designed to instil the discipline of saving to your kids. It comes with a Guaranteed Savings feature which holds a certain amount in their account to protect their savings from impulsive withdrawals. They can also use the debit card for mobile phone reloading via ATMs, giving you the peace of mind that your children will never be out of spending resources in case of an emergency.
Children who learn money management skills early on have good chances of ending up in a better position financially when they grow older. BPI is and will always be your family’s partner in ensuring that your children have a secure financial landscape ahead of them.