Teaching finances is not an easy feat even for professors and financial experts. It is not an easy job and when parents try to take on this job for their children, it becomes a lot harder. Teachers have the advantage of teaching students who at least has a decent background about finances they might have learned at home. That falls in the hands of parents and doing something for the first time is always a hard undertaking.
There are money lessons for children that parents can start with but most of them are just read and reminded by the parents so children might have a hard time understanding much more remembering those lessons. It is an advantage if you had great money lessons from your own parents because you have a take-off point and you just need to tweak it a little bit to apply to present day scenarios.
There are even apps that teach kids about personal finance according to USNews.com and they can greatly complement how you teach your child. Remember that it should not be your sole basis to get your kids to understand personal finance. Use it as a tool and not the centrepiece when teaching finances to children.
Not to take away from what technology has done to make it easier to impart financial lessons but it is always better to be personal with the lessons. As a parent, you know your kids very well and you know how they will react to certain teaching methodologies. There are some kids who gets the lesson the first time around while some needs more examples and a lot more caring.
But as you teach your children about finances, try to guard against the most common mistakes other parents make when teaching money lessons to kids. It is challenging enough to get the approach right without messing it up and making mistakes along the way might send the wrong signals to your kids and they pick up the wrong lessons.
Mistakes parents make when teaching money
When you are teaching finances to your children, here are a few of the most common pitfalls of parents that you can correct as soon as you feel you are headed down that path.
- Doing the groceries without a shopping list. One of the easiest things to forget when doing the groceries is your list. At times you are just in too much of a hurry and sometimes you already know the drill as you have been doing it for quite some time already. But you need to teach your children to shop with a list for a lot of reasons. It helps guard from overspending and picking up unnecessary items and even helps monitor the prices of the goods you are buying. Make it a practice to bring a list when you go shopping especially when you are doing it with your children.
- Impulse buying on wants. One way to keep and stay away from debt is to get your impulse shopping in check especially if your children are with you. Just because that pair of shoes went up on sale doesn’t mean that you need to swipe your credit card just to get it. Get a hold of your emotions because you are not teaching proper money management to your kids. Stick to your budget and buy the things that you need and not the ones you want.
- Putting too much focus on today. Financial planning is an important lesson when teaching finances to kids. It is important to focus on today but you need to also remind them that they have to simultaneously plan for their future. This is where their retirement and reserve funds come in to the picture. Putting food on the table today is paramount but as you go about this, teach them to save for the future as well and not live live like a one day millionaire where they spend everything one one day.
- Teaching with amounts than percentages. This is a common mistake when trying to teach money management to children. Instead of teaching them how much to save every month from their allowance, it is better to work with percentages rather than dollar amounts. As they learn this, they get to adjust the amounts that they save every month regardless how much their income varies from month to month.
- Giving them money just because they asked. Children would always want to buy the latest toys and games and if you always say yes, you give them the wrong impression that just because they want something they can get it. You need to help them manage expectations in life starting with this one simple financial lesson. If they want it, they can work for it so they get to value the item once they buy it.
- Developing expensive daily habits. Expensive bad habits according to Businessinsider.com will cost money and a lot more plus it shows to your kids that it is okay to smoke or drink and waste their money and life away. They need to value their life and know that small amounts everyday for nasty habits will total a big amount in the end.
When to include your kids
When teaching finances to your children, there are times when you can include them in the family budget planning. Here are some instances when they can come in and help plan the expenses.
- When planning vacations. Vacations are usually to create great and lasting memories with the whole family and one where you will find common overspending triggers. So as you carefully plan your vacations, try including your children so they know what they can and cannot do while on a trip. Encourage them to share their inputs and try to see how they can make family vacations a little more exciting.
- Planning birthday parties. You can include your children in planning birthday parties whether it is their own or for a sibling. They can see the cost involved or try to work around a budget and give them options for the party whether it is better to have one big cake or have multiple cupcakes.
- Choosing a school for college. USNews.com shares that there are steps in choosing a college for higher education and these are times where you really need to include your children in the planning because they will essentially be the one attending that school.
- Buying small items. With the money that they get doing chores at home or from saving their allowance, you might want to help them decide on what they will buy with their money. You can help make them see how to buy items by looking at more than just the tag price. Let them know how to gauge quality and practicality of the purchase they make and not just look for the cheapest one on the shelf.
Teaching finances to children is a tricky one because more than what you tell them, they will look at and eventually copy how you manage your own finances. If you tell them to save but keep on coming home with shopping bags because they were on sale, you are sending mixed signals. If you tell them to try to save around the house but you leave your own televisions set on the whole day in your room will only confuse the. Practice what you preach so your actions reiterate the money lessons you are trying to impart to your kids.