Most parents allocate a certain amount of pocket money to their children, and rightly so. However, only 1% of children save money in a piggy bank and do not spend it, purposefully waiting for the right amount to buy a toy or gadget. As a parent, you can influence this fact by developing financial IQ.
The first thing to do is talk to your child. It doesn’t matter how old he is – three or ten, you can give examples and explain where they come from in a language accessible to the child, for example, through a simple game in a store or family, where the kid takes the role of a simple worker.
Also, you should not be afraid to tell the truth – there is not enough money, because the salary is delayed or there is no work yet.
There is nothing here that could undermine a child’s attachment to a loved one, on the contrary, it is important to show that mom and dad continue to remain so even with financial difficulties.
Thus, in the future there will be no problem in relationships if you cannot purchase an item that is not the most affordable at the request of the child. The following are ways that will help achieve greater mutual understanding in financial terms, teach the child to take care of family money and human labor.
1. Personal example
The easiest way to teach your child financial literacy is to lead by example. Children are perceptive and notice a lot, but the child may not understand your actions if they are not voiced. When choosing products, say why you buy this particular product.
The reason may be the expiration date, a favorable price, a favorite manufacturer that adheres to the “price-quality” rule. Without these explanations, you may run into problems such as “bought the wrong thing” despite the fact that the pupil regularly visited the store or market with you.
2. Provide counterfeit money
Sounds a bit illegal, but it’s not like that. Print a different denomination on the printer and offer to play in the store. In addition, the method is good for small destroyers to accustom to the careful handling of this type of paper. The kid can learn not to wrinkle, not to tear money, to neatly fold it in one place.
3. Avoid easy politics
Always available money is bad, you have every right to set limits, as happens in everyday life. An adult is deprived of his salary and fired for poorly done work, improper behavior in the team, constant lateness.
All of the above should also apply to a child of any age, otherwise, you risk raising a lazy person and blaming everyone around except yourself. Money, like praise, must be earned, not just received.
4. Let us save money
Oddly enough, the biggest mistake adults make is that they acquire dreams on their own. Let’s say a girl dreams of an expensive scooter, the cost of which exceeds half of her father’s salary. Grandmothers will be the first to know about it, collect the required amount and give it as a birthday present. Why error? Firstly, the granddaughter is deprived of the opportunity to develop such a quality as determination.
Secondly, it does not meet with difficulties and understanding of reality. Outcome? A spoiled young lady, of whom there are already plenty among young people. Let your child achieve the goal of accumulating and feeling real pride in their efforts.
5. Pay only for important actions
The section deals with such a question as – to pay or not to pay the child for the fulfillment of household obligations. Here the situation is very controversial, because you know the child better than others and it is up to you to decide what will harm or benefit. When the pupil is lazy, does not want to do anything and everyone is forced to clean up the scattered toys after him, then it is necessary to cultivate respect for work, and not introduce monetary incentives.
A diligent child can be rewarded for doing certain errands that are not related to cleaning his room and washing his dishes. As an example, let’s take a situation where the father needs help with repairs, in other words, payment should come with a really responsible task.
6. Use the 1-1-1 Method
Encourage your child to divide the amount received into three parts – save, spend and give. Several problems are solved at once. The desire to spend a certain amount on a small toy is satisfied, another part is set aside for an expensive thing, and the third is shared with a neighbor. The latter is important for the education of humanity. The child should know that there are kids brought up in an orphanage, while others are a little lacking in order to regain their health. Also, the method acts as an inoculation against greed.
7. Open a bank account and teach not to take loans
Upon reaching the age of 10, open a bank account in your name, but deposit the child’s money. Show all reports on the accumulated amount and interest, explain how the bank considers them, which deposits are the most profitable.
Talk about the advantages and disadvantages of loans when using the amount of debt is justified and can do more harm than good. You may have to explain and tell several times before understanding comes, but believe me, it’s worth it.
8. Involve in big purchases
Another big mistake is depriving you of the ability to make decisions in an area such as buying a house or a car. Does the child not understand? He will understand, but only with your help and it will become a valuable experience.
The choice and purchase of a house is accompanied by careful planning, weighing all the pros and cons. Allow children to your negotiating table, ask their opinion, explain why it is not true, what is the best thing to do.
You can disagree with all of the above and it will be right, because you have freedom of choice, as well as your own opinion. However, never forget that it is in your best interest to teach your child financial literacy, because whoever, if not them, will support you in the future.