Teaching your children how savings work and the dynamics behind money management helps in making them adults who are prepared and aware of how the world works. It is your responsibility to accompany the growth of young children capable of understanding the dynamics related to personal finance. So here some tips to follow.
It is important to understand the real functioning and cost of debt and loans. The advice is to use real examples, explaining how the interest rates paid on the borrowed amount increase the total cost of financing. You can start as early as when they are four years old. You can easily use their toys to teach them how they can borrow money, and how to pay it all back.
It is vital to teach them to save what they can and make saving a habit by monitoring their spending goals and the total saved each month. Get them a change box online so that they can save up whatever they receive. Get your child used to reading books on savings and investment created especially for younger children. Making savings automatic can lead to great results.
Show your kids how mom and dad’s super-secret chests can protect their pennies so they don’t spend all of them on candy and little vices. Teach him to save and forget about it. But do not deprive your child of all his small savings: you should also learn that saving everything does not lead anywhere. They need to learn to spend and invest too.
Your child may find himself in a situation of economic straits as a young adult, and will be forced to cut some expenses to make ends meet. You can use imaginary characters and build scenarios on how to cut some costs and especially prioritize so that they know what to spend on and what not to spend on.
Adult life costs much more than a teenager or child can ever imagine. It is good that your children know that having an emergency fund can solve many problems when they grow up.
Banks today, thanks to the internet, offer a real-time service through home banking, without costs and above all without long and exhausting queues at the counter. So you can start teaching your kids on how to do transactions online itself. Open a separate account for him and let him access these accounts through the computer, look around the site and learn about different features in bank accounts, the various services offered etc.
Many young people struggle to find a motivation to work and it is the duty of parents to help them understand that reality requires that you work hard to get a salary. Help your kids find work around the area. It could be even at your home where you’ll pay him small amounts for doing household chores. Selling cookies, lemonade, old toys etc. are also great ways for kids to earn some extra cash.
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