Teaching our kids about money and finance is not a tough task if you start early by applying and inculcating simple things and habits in them.
What I am going to share here are broad concepts and the best way to teach kids is always through fun activities that can really help them understand the concept.
Money Talks: Even at a young age, kids can understand the concept of money. You can start talking to them about money when they learn to count and do basic addition. Give them loose coins of 1 Re. and ask them to give you 5 Rs. in return. When paying a bill, ask your child what’s the amount of the bill and to help you add the money that you are paying in cash. This way kids will understand that things don’t come for free and you need to pay for everything you want.
For older kids, when shopping at a grocery store, ask them to compare two products based on the price or teach them why you should shop during sales and discounts. At home, explain them how their simple actions and demands can impact your finances e.g. leaving a light on in a room can cost you in the electricity bill and that they need to be conscious about it.
Allowance: Giving kids allowance makes them feel responsible for the money that they have in hand. Don’t go overboard when giving an allowance. Match it to your child’s age. A 5-year-old can get 500 Rs. a month and a 10-year-old can get 1000 Rs. a month.
Earnings: There are many things to do at home for everyone from big to small. For smaller kids, tidying their room or helping set up the dinner table or sorting their toys can be rewarded with an allowance.
If your kids are teenagers, include more chores around the house or make them run an errand. Ask them to do simple work like pet walking or tutoring kids or siblings at home to fetch an allowance for themselves. This way kids will learn to not only earn money but also value what they have earned.
Saving: It’s easy for a child to point finger and demand a toy but make the buying process interesting for them by giving them an aim to collect money, save and later get the thing for themselves.
For little older kids like teens, you can open a savings bank account and encourage them to add money regularly. By having a bank account, they will learn how to write cheques, withdraw money from an ATM, read their bank statements and understand the basic functionality of a bank from an early age. As kids get used to savings, they will also learn to be discipline with their money and set goals- two financial habits which will benefit them throughout their life.
Budgeting: Think this is tough for kids? Just give it a try. Simple way to make kids understand budgeting is to make different piggy banks for Toys, Books and Clothes. Now ask them to put their money in what they want next. If its toys, ask them to put more money in that piggy bank. By doing this, they will learn the concept of allocating funds towards their goal and budget more for what they need.
For older kids, you can ask them to jot down their source of income and their expenses. Like a high school child would go out with friends for coffee or movies. Make them write down what and where they wish to spend. Encourage them to be of more help around the house to earn more allowance and budget the money against the expense that they plan to make.
Need v/s. Wants: It’s easy to demand a thing that the kids see and want but by teaching them the difference between need and wants, they will understand how to prioritize and spend on what is needed the most. If your kids demand a 2000 Rs. box of Lego, ask them what would they prefer, a box of Lego or a trip to the zoo which was their demand some time back. They will know how a simple box of want can be traded for an experience they need.
Delayed Gratification: There are times when we entre a store to just browse the collection and not buy each time we go there. If you enter Hamley’s or Toys R US, tell your child you are “just looking”. If you are consistent with your message, they will accept it without throwing a tantrum. This teaches them that toys come during birthdays and special occasions and not every time you walk into a store.
For older kids, if they want a play station, take them to the store to see its features and know the price. Now make them save for it and since it is expensive, you too can chip in some amount. The child will know that expensive things take time to come and need to be planned and budgeted for and after getting it, they will value it more as they have paid for it from their savings.
Giving: We want our kids to be responsible citizens in the future and from a young age, make them give a small portion of their allowance as a donation towards a worthwhile cause.
Raising financially savvy kids is not difficult if you follow a logical progression which will allow your kids to gradually understand the concept of money and wealth building. Everyone wants to see their child financially secured and safe when they grow up and like every other habit, money habits when started from an early age can make them money mindful when they grow up.
In topic for my next blog is “Should we hide money problem from our kids?”
Till next time
Mask up, sanitize and stay safe
This blog is a pity of Blogchatter’s A2Z challenge #blogchatterA2Z
40 replies on “Tips on raising financially savvy kids”
I loved these points especially the delayed gratification.
Thanks a lot
I remember giving our daughter when she was young and allowance when she was young. Later when she had to use her money, she was extra careful about how she is spending. Giving real-time scenarios and opportunities help them in understanding finances easily.
Such an informative post and I like all the ideas you had suggested. indeed if we start at an young age, kids learn better the importance of managing finance and money. giving them chores and working hard to earn is great idea and I had used this with my girls during last summer vacation.
Kids should be taught about finance management from an early age, it helps then to be responsible. They should learn about saving and budgeting . While managing the money, they themselves get idea about their need and wants
Oh yes, by learning how we dealt with money, we have to make our kids aware of its value and how to deal with it too.
I agree this is something kids needs to be taught at a very early age. As this generation has more of an get attitude, learning to take responsibility and accountability of finances becomes very vital.
I loved the need vs wants example that you have mentioned. A real life experience and a box of toys would be a great example of decision making.
Educating kids on time about money is really important I liked the points you covered definitely going to teach my kid too.
It is quite amazing how much you advice you have to share with the rest of us, on this subject. Really appreciate it since most of us don’t know how to approach the subject.
Involving kids in budgeting helps them understand the concept very well and they get to know many details through this process. I also agree with the delayed gratification that adds value in the parenting and also makes sure that we don’t buy things in haste.
These are indeed interesting to raise kids who are more responsible financially. In fact this reminded me of my own childhood when my parents also followed these things with us.
Yes of course raising financially savvy kids is very important these days as they tend to take everything what they get from their parents for granted. For making them value things it is important. I try to teach my kid by giving him earnings for the things he helps me out with.
excellent tips. i remember, we were also taught how to handle and manage money using these techniques. Definitely, managing your own pocket money has a low/no risk way to learn 🙂
We always tend to underestimate our kids’ ability. Teaching them savings and financial independence is very important. You have given an exhaustive account of how to go about it.
Thanks a lot
All the pointers mentioned by you are spot on, to raise the financially savvy kids. A bit of discipline in following the self-made rules for both kids and parents can bring a huge desired change in kids of understanding the value for money in future!
I believe that kids must know how to handle money, irrespective of age. Your pointers are practical and are sure to instil discipline as well as importance of money.
That’s a really informative article. I like the point where you said need vs want I think that’s one place we all need to focus, plan and move forward. Amazing tips!
In today’s circumstances, we need to make our kids aware about finances in their understandable language. Inculcating saving habits among kids is very important. And we don’t have to do anything extra Just few basic knowledge his good enough to start.
I loved all these ideas Hansa. indeed, kids can learn a lot about finance, saving and other important money matters, if we give them opportunity and age appropriate responsibilities.
Kids are quite smart and finances and saving is something if taught at really stage in life have a better impact.
kids should be included into finance planning and management since the beginning . AS a parenting I try my level best to teach my kiddo about importance of money management.
It is desirable that kids are aware of basic financial aspects like saving. It is good to teach them the basics early on so that they learn to value money. These are some good tips to teach kids about financial concepts.
It’s beneficial to make kids understand how to handle money to raise them financially mature. I liked your tips, they’re handy and very useful too.
I so needed to read these points buddy, they are such a worthy reminder. Thanks a lot for this series it has added so much value
Thanks a lot Roma 🙏
It is indeed imperative to teach young kids about finances and savings. These small lessons/steps will build a foundation for tomorrow’s financial understanding 🙂
Yes absolutely right
It’s important for kids to learn and understand the value of money and saving. I loved the tips and ideas you have shared.
Yes indeed it is. Thank you
Delayed gratification is a wonderful way to make them understand the savings and how to arrive at the right choice. Agree with all the points mentioned in the post.
Yes delayed gratification has worked well with my kids.
After reading your post I am thinking of practising delayed gratification and needs v/s wants with my son to teach him more about finances. Thanks for this helpful post.
I am happy you found this blog useful. Yes delayed gratification works wonders as now my kids know they don’t get anything they ask. They wait for special days.
This is very informative post and loved the tips you shared . It’s important for kids to learn and understand the value of money and saving.
Thank you 🙏
Financial independence is the important life lesson that you must teach your kids. You have given an important reminder to parent as to how we should attain it.
Yes money goes a long way in our life and we shld start by preparing kids about it.