How did you learn about money when you were a kid? Did your parents teach you how to budget your daily allowance at school, or did you simply follow in on your siblings’ habit of putting coins in a piggy bank?
Today, teaching kids how to manage their finances is different. Money (in cash or digital form) is literally falling into the hands of children— and determining how or when they should start learning to manage it brings about a vague and indefinite debate. (Read: 5 Tips For Safer Transactions Online)
Talking about money isn’t always easy, though. For most parents, money management can be a stressful topic, as they want to protect their children from the realities of financial distress. However, whether we like it or not, our children will still have to learn to become independent with their money.
Check out these three tips to empower them when it comes to making financial decisions!
Money Habits for Children: Live Below Your Means
One of the first things to teach kids is to not overspend their money. Financial advisor and motivational speaker Chinkee Tan says “it’s not how much money you make, it’s how much money you keep.” The most important financial habit, so you can stay out of debt and stress, is to be able to save money— and the way to do that is to live below your means. (Read: The Five Best Gifts for a Meaningful Christmas)
This is especially hard because of peer pressure. Kids, especially teens, are easily swayed by the latest trends because of what they see in their friends. However, it would be helpful to inculcate in your kids that they should learn to live frugally because this will serve them in the long run.
Money Habits for Children: Increase Income Opportunities
As young as they are, parents should teach their kids that they should not depend on their parents for all their wants. Chinkee Tan says that he never lets his kids depend solely on their allowance or on them for their wants. “Teach your children to be creative in creating their own money so they will always be on the lookout for new opportunities,” he says. (Read: 5 Realities of Having a Seafarer Dad)
If you will let your children depend on you for everything, you are teaching them to be lazy when they become adults.
Money Habits for Children: Pay Everything in Cash
It would be wise to teach kids that they should never spend money they do not have. In short, debt should be a no-no. “Dapat matuto akong magtiis at magtyaga,” Chinkee Tan says. It’s great to teach children that they should not compare themselves to other people leading to them being in debt. Besides, a credit card is the most emotionless way to spending money— unlike cash where you see that it is slowly disappearing from your wallet.
For more money tips, see this video.