Does your child understand the concept of money? If they are under the age of ten, the answer to this is most likely no. While you may not see this as a problem at the moment, it can cause you or your child some difficulty in the future. To avoid any confusion, you should start teaching your children about money from around the age of five, helping them to understand the concept and also providing them with the knowledge they need to become financially independent and secure.
Take a look at these top three tips which will help you introduce the concept of money to your children, in preparation for the future.
Explain the meaning of money
Many children will witness their parents swiping cards or handing over money while shopping, which may give the impression that money is unlimited. To avoid this, you need to instil in your child as early as possible that money is not limitless and does not grow on trees. To achieve this, you should start by explaining the effort working adults put in to receive a substantial amount of money a month in their bank to buy what they need, such as food, drink and household bills. You should then make it clear that anything leftover can be used for treats like days out, buying toys or sweets.
Lead by example
One of the best ways to influence your child’s money management skills is by setting a good example with your own financial decisions. Keeping up with your bills is crucial, which could include any clubs your child is involved in, because if you don’t keep up your payments your child may be left out and this could have a negative effect on their wellbeing. Another way to lead by example is through investment, and you should find out everything you need to know to avoid potential risk. You should also seek advice from property investment experts like RW Invest, who can offer you valuable information on your investment, which can then be passed down to your child in more simple terms. This way, you can show your child how to maximise their money with opportunities like this, helping them to become more financially aware.
Give your child an allowance
Taking a direct approach with your child is a great learning curve in helping them to understand the concept of money, and it should also provide them with the drive to start earning their own. To start, you should consider getting them their own piggy bank, where they can save up money for an item of their choice. You could also take them shopping and let them choose their own items with their own money, although explain how other foods are better for us than chocolate to help them make better decisions. If you’re not comfortable handing over money to your child, you could consider alternatives like monopoly money, or have them make their own, which will be much more entertaining. This way, you can show them how to make the most of out the money they have by finding bargains that allow us to buy more food that is both cost-efficient and nutritious.