Every parent wants the best for their kids. Children who are taught about money management acquire the knowledge and abilities necessary to manage their money effectively both now and in the future.
Children who manage their money better typically have parents or caregivers who talk to them about it and give them financial responsibility from a young age.
The following are some of the money lessons that can be helpful to your child:
The value of money:
Teach your child that money is not easy to come by and that it has to be earned through hard work.
Teach your child the importance of budgeting and the need to make smart financial decisions. Encourage them to save money and spend it wisely.
Teach your child to be patient and to save for things they want, rather than buying everything on credit or borrowing.
Teach your child about the power of compound interest and how investing can help grow their wealth over time.
Let your child know the value of giving back to the community and being charitable.
Help your child to know that borrowing money has a cost, and that it’s important to pay off debts on time and avoid accumulating unnecessary debt.
Teach your child the basics of managing their money, including setting financial goals, tracking their spending, and creating a personal budget.
Invest in books that teaches the basics of personal finance, including understanding financial statements, managing credit, and building wealth.
Lead by example:
A study by the University of Cambridge found that money habits in children are formed by the time they’re 7 years old. what better way to teach your child about money than to show them that you’re practicing what you preach? Open a savings account in your child’s name, invest in shares, bonds.
Remember, setting up your child financially is not just about giving them money. It’s also about teaching them good financial habits and helping them develop the skills they need to be financially responsible.