We are all busy and there is always so much to be on top of, school lunches, homework, after school activities, work, dinner etc. Sometimes teaching your child about money is the last thing on your mind. However, as you know kids learn from their parents and whether you are intentionally teaching them or not just observing how you behave, say and react gives them a sense of what to do. Kids learn more from you then from their teachers and friends combined.
If you don’t take the time to teach your kid about money, they may learn from negative or outside sources, such as a friends, television or other family members who aren’t financially savvy. If you are already teaching your kids about money, this is fantastic and you are setting your child up for financial success in the future. Even if you are already teaching your kids or you are planning to, here are some of the not so good ways to teach kids about money that you may want to be mindful of.
1.Waiting Too Long to Talk to Your Kids About Money
Kids understand more than you think. Starting at age 3 isn’t too early and you can start with simple concepts like what is money, how money is used to buy things from the shops. Playing simple shopping games at home is great fun as well. See What to Teach Kids When.
2. Not Talking to Kids at all About Money or Leaving it to Someone Else to be Their Teacher
Some parents find talking about money to their kids taboo or not something that they should be sharing. Curiosity about money should be encouraged. Obviously, it is up to you what you want to share, especially if asked how much money you have or how much you earn, but these questions shouldn’t be shut down either. These are great segways into explaining how money is earnt from working, how value is placed differently on different skills and jobs and how saving and investing money impacts what you have.
Some schools and teachers teach about money or financial literacy in some form. However, it shouldn’t be the job of teachers to instil good money habits. Always encourage your child to learn about money at school but ensure you are also giving them a good education on the topic at home.
3. Lying to them About Money
Especially when kids are young you may think they won’t understand or don’t need to know. Children understand more than you think and making a habit of lying to them breeds mistrust in what you say or potentially stops them asking questions in the future. Easy traps to fall into is to say you don’t have money when they want a toy or a sweet but then you go and buy the groceries. It’s easy to say money grows on trees when you can simply explain how money is earned. We all do it but just be mindful that the truth and even a simple truth goes a long way to starting a child on the financial savviness journey.
4. Not Showing Them How to Manage Money or Bank Accounts
As your child gets a little older and they have a bank account. Show them how to use it. Gone are the days of visiting a banker at the local branch but simply showing them how to access their account online and showing them what everything means is a great first step.
Next, explain to them about money going in and money going out. Show them actual transactions of when they put money into the account and when money was taken out plus of course the remaining balance. If the account charges fees, explain to them what they are too. However, many bank accounts these days don’t have fees so it is worth hunting around if your account charges them.
5. Uncontrolled Spending
Kids learn from what we do and they use us as their role models. If we spend money without a thought then are stressed when bills come in or when something unexpected happens, this sets an example on how to manage money. Even just the view that you go to school, then university, then get a good job so you pay for a nice house and car needs to be challenged in today’s uncertain world. With more and more technology, different skillsets becoming less in demand and others increasing, companies choosing staff reduction as short-term cost savings, being in a good financial position to weather whatever life throws at you is good practice to have.
Teaching kids how to save and to have a savings buffer for those unexpected events is important. To think about what they spend their money on, not saying you can’t have fun and buy what you enjoy but put it in context of your financial situation. Showing how to manage and track their money through online banking or specific finance apps is also good practice.
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