Today’s generation of kids have a wider array of options than their parents had. This freedom comes with responsibilities and one of the ways parents can help them make the most out of it without being a slave to materialism is if they raise kids who know the true value of money.
For many, the mere act of talking about money with their little ones is crass and unneccessary. But a recent book by New York Times’ money columnist Ron Lieber entitled The Opposite of Spoiled: Raising Kids Who Are Grounded, Generous, And Smart About Money sheds light on new and effective ways of incorporating financial knowledge into parenting and introduces new techniques to raising kids who are not entitled but financially savvy.
Here are five simple tips parents can do to make their kid a money whiz.
1. Talk to your kids about money early—and often
The first step is to simply talk to them about money. Of course, parents want to shield kids from the real world for as long as possible. But teaching them that dealing with finances will be a part of their future helps them become more responsible early on.
Most parents dodge the topic for fear of fostering greed in their kids but, according the aforementioned book, what it inspires are largely positive traits, such as: modesty, generosity, curiosity, patience, thrift, perseverance and perspective.
Don’t evade their questions; answer and engage them. For instance, if your kid asks if you are rich or poor, don’t simply answer with a ‘yes’ or a ‘no’ but start a conversation by responding something like, ‘what makes you ask that?’
2. Give your kids an allowance but not for doing chores
The whole point of giving your kids an allowance is to teach them how to save and spend.
Sure, they need to develop a work ethic, but that’s something they should be learning outside the home, says Lieber.
Chores are how they form a deeper understanding and bond with the family for helping out in maintaining the home.
Try having three money jars at home: a “Spend” Jar for impulse purchases, “Save” Jar for large necessary purchases, and a “Give” jar for charity.
As they get older, increase their control over how much should go into each jar. You could also give them incentives for saving (like interest) and teach them how to research specific charities that they feel they’d like to help.
When they do express a desire to make a purchase you don’t agree with, calmly explain why you believe it is unncessary but allow them to explain their side without saying ‘no’ right away.
More about encouraging money smarts on the next page!
3. Allow them to learn from both learning and giving opportunities
As kids grow, they are forming an understanding of how money works. So it’s important for parents to provide practical explanations that are still anchored upon family values.
Fatherly suggests introducing the “More Good/Less Harm” rule. For instance, does buying that imported product make sense when buying local (and helping the economy) is just as awesome?
As for cultivating a habit of giving, you can try explaining to them what charitable causes you support and the reason why you chose them. This will encourage them to go back to their “Give” jar for causes they believe in.
4. Put them to work
While parents would like kids to enjoy their freedom as much as possible, you would be doing them a huge favor by allowing them to become industrious at young age.
This does not only make them money-smart but life-ready.
Teach them how to have fun while earning like recycling and exchanging these for cash.
5. Remind them to always be grateful
Even if you’re financially well-off, your kids could benefit a lot from a widened world view. Teach them to have compassion for kids and families out there who struggle from day to day.
Why not try getting them involved in sports and other activities with kids outside their own school?
Fostering a sense of generosity and understanding for kids with different economic backgrounds teaches them compassion as well as respect.
READ: How to Earn Money as a Kid: 5 Fun Business Ideas!
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