Did you wish you'd been more wise about money as a kid? Sadly, many college graduates finish school with a degree but still need help to handle their money.
As a parent, you already have much experience handling your finances. In that case, you can share with your kids stories about your experiences in earning, saving, and spending money when you were still young and what they can avoid to be more competent in handling their finances.
We can stress the importance of being cautious and smart with money, but the most effective way for them to learn is through personal experience. Let them know by trying things themselves.
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Chloe Lin had an interview with Money Coach Ernest Tan about tips on how to raise money-smart kids.
There are lots of ways to help your kids understand how to handle money wisely, and here are some of the tips that might help you when you want to raise money-smart kids:
1. Give them extra money to manage
Please don't give them enough of their pocket money in school. If you don't give them extra money, they don't learn to manage a little extra before they work the million you'll leave behind.
Letting your kids manage money can teach them important lessons. It's like practicing a sport or playing music to get better. They learn from mistakes, like spending all the money on toys and realizing the importance of budgeting.
Managing money helps them decide and set goals, like saving for a particular toy. They feel responsible for their money and gain confidence in handling it well. Learning to manage money early prepares them for real-life situations, making smart financial choices as they grow up.
Start with a small amount, guide and support them, and let them take charge to become money-smart kids.
2. Teach kids about money based on their learning style.
Everyone has a different way of learning. When considering your kids' learning styles, teaching them about money can be fun and effective. Let's break it down for kinesthetic, audio, and visual learners:
Kinesthetic Learners (Hands-on learners)
For kinesthetic learners, making money lessons interactive and practical is essential.
Let them handle coins and bills: Touch, count, and sort money. This hands-on experience will help them understand the value of different coins and bills.
Play money games: Engage in activities like "store" where they can buy and sell toys using play money. This way, they'll learn about spending and saving playfully.
Money jars: Use clear jars to represent savings, spending, and giving. They can physically divide money into these jars whenever they receive money (e.g., as an allowance). It helps them visualize money management.
Audio Learners (Learn through hearing)
For audio learners, it's essential to incorporate sound and discussions in money lessons.
Storytelling: Share stories about saving, budgeting, and wise spending with your kid. Use examples that are relatable and interesting to keep their attention.
You can also read them investing books to teach them about investing early in a fun and engaging way.
Podcasts or Audiobooks: Look for age-appropriate podcasts or audiobooks about money management. Listen to them together and have discussions afterward.
c) Money conversations: Regularly talk about money matters with your kids. Give answers to their questions and let them express their thoughts about money.
Visual Learners (Learn through seeing)
For visual learners, providing clear visual aids is vital to understanding money concepts.
Money charts: Create simple charts or graphs to show how money grows in a savings account over time. Visualize the progress to encourage them to save more.
Money videos: Find educational videos about money topics aimed at kids. Watching visuals will help them grasp complex concepts quickly.
Budgeting boards: Make a budgeting board with pictures representing their expenses (toys, snacks, etc.) and income (allowance, gifts). This helps them understand income and expenses visually.
Remember to cater to their learning styles and be patient. Repetition and consistency in teaching will reinforce their understanding of money management. Additionally, relate money lessons to real-life situations and encourage them to apply what they've learned daily.
3. Teach them about money by being an example.
Being a good money role model for your kids is essential because they learn best by watching what you do. When they see you making smart choices with money, like saving, budgeting, and avoiding unnecessary expenses, they will likely pick up those habits, too.
If you're reading stories about investing to your kids, read books about money and investing that can broaden your knowledge and teach those to your kids. You can also play board games to teach kids about money.
You build good money habits by modeling responsible money management, making it a regular part of your everyday life. This helps them learn to prioritize needs over wants, avoid impulsive spending, and understand the value of money.
Being open about finances creates opportunities for discussions, where you can explain how money works, the importance of saving, and how to plan for future goals. Managing money well reduces financial stress in the household, making children feel more secure when they see you in control of finances.
Money-smart kids are likelier to become money-smart adults as they develop skills to handle financial challenges and make informed decisions.
By showing them responsible money habits, you encourage them to take responsibility for their financial well-being. Being a money-smart model sets a positive example, helping them develop healthy money habits and valuable life skills for the future.
Follow through these parent tips to raise money-smart kids so it may have a lasting impact on their financial well-being and life skills.
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