Instilling financial literacy in children sets the stage for a lifetime of smart money management. You can turn financial education into fun and adventure for kids and let them learn the importance of money by following simple tips.
1. Teach Them To Save Pocket Money and Buy the Stuff
Why not add a dash of excitement to the usual routine of getting everything your child wants? Give your kid some money to save up and spend on something special they truly love! It's not just about getting stuff; it's a fun way for them to learn about saving up and making their hard-earned money count. Watch them light up as they realize the thrill of setting aside cash for something they've got their heart set on!
2. Invest Small Amounts in Stocks
Children cannot get in-depth knowledge about stocks. You can simply invest some amount in companies they know, like Apple or Tesla. You can label a few boxes with the company names and ask your kid to start putting the money he gets in the store he wants to invest. When the amount reaches one stock, buy it and show your kid how it works in real-time.
3. Cash Instead of Gifts
Many smart parents give their children cash instead of gifts on Christmas and other events so they can buy whatever they want and also save some amount. They can also keep saving the amount for the whole year and buy something big like a Playstation, iPad, or a bicycle. It will help them grow a sense of saving money and spending it wisely.
4. Taxes and Jar Accounts for Teen
As your teen begins to earn money, it's essential to introduce them to the concept of taxes. For every dollar they earn, allocate 10% to a designated “taxes” jar or account. You can decide with them which tax they want to pay. This approach not only imparts a practical understanding of taxes but also encourages collaborative decision-making for the benefit of the entire household.
5. Loan Them Money for Small Initiatives
You can encourage your children to come up with smart business ideas. After they gather five ideas almost, you can decide which one is good and lend them some money as a loan to invest. It will help them know the importance of money and know how good or bad a loan can be. After lending a loan, you can set a specific period in which they must return the amount to you.
6. Set a Specific Amount on Different Goals
Try to set different goals for your child depending upon their ability and then pay them an amount as a reward. For example, if they are not paying attention to their studies, you can set a goal for them to secure a possible grade for them and set a significant amount as a reward. It will encourage your child to focus on important things and know the value of money.
7. Save, Donate, Spend Rule
The save, donate, and spend rule is followed in most Asian households where children are given pocket money on a weekly or monthly basis. They are required to spend a certain percentage of the amount, save a small amount, and also donate some amount to deserving. For example, you can add 75% as a spend, 10% to donate, and 15% to save for parties and other stuff.
8. Talk About the Prices When Shopping
Don't talk too much, just discuss the prices of whatever thing you are buying. Let's suppose you want to buy a basket, discuss the cost of it with your child, compare it with other baskets, and tell them what other things you can buy instead of the basket with the same amount. It will help them know the importance of money and think about whether what they are buying is necessary or not.
9. Open a Junior Bank Account
Take your child with you to a nearby bank and open a junior account. This will encourage them to save the amount as an adventure to withdraw it from a bank card. You can also set a day in a month when you can take your child to withdraw the amount from the bank account they have.
10. Mini Store at Home
Turn snack time into a mini-shopping adventure for your kids! Instead of just handing them snacks, create a cool mini-store at home. They can use their pocket money to “buy” the snacks they want from you. It's not just about munching on treats; it's a super fun and learning activity. This way, your child gets hands-on experience understanding the value of each snack and learns how to make choices with their money.
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