HOW TO HAVE A MONEY SMART KIDS? ( AGE 3-12 )

December 22, 2020

HOW TO HAVE A MONEY SMART KIDS? ( AGE 3-12 )

What are Money Smart Kids? Money smart kids is children that are able to understand the way to finance their money in an early age. This is important because it will affect their future financial capability. Money lesson for kids will last for their lifetime.

Money lesson often get ignored by many parents. However, what you don't know can hurt you. Start shaping your child's relationship with money and start early on financial education. This could help them to avoid losing or wasting money and financial scam. Parents don't have to be an expert in finance, however they could just start a conversation about money when the opportunity comes up.

How to teach your kids about money?

1. Explain where the money comes from

It is important to teach your kids that money is not coming from parent's wallet. Parents should repeat demonstrate and demystify the relationship between work and money. They have to understand that money comes from hard work and earning.

Parents could let their kids earn an allowance by completing simple chores, like making their bed or cleaning their room. However, this method should only be implement once in awhile as you wouldn't want your kids to only do housechores for money.

Explaining the concept of money and how did money come from is the first step of introducing money education.

2. Understanding saving

Saving is a important head start for kid's money education. Saving is the most important steps to achieve financial freedom for a person entire life. Therefore, saving is an essential lesson for kids to learn since young.

Parents should prepare a piggy bank or saving account for their children to save their money after they earned through doing housechores or allowance. They have to educate their children regarding the purposes of saving, such as emergency use. People don't just earn to reach a larger goal, they save for future financial planning.

3. Understanding needs and wants

Spending is the fun part of earning money. Kids might want to spend their money on toys or their favorite food. However, other than saving, parents should teach their children to identify what are the needs and wants. But how?

Emotional purchase is the main reason to create "wants" in our mind and necessities are "needs" that we might find it difficult to choose against both element. Parents could teach their kids on differentiating among needs and wants especially for common personalized ads nowadays.

Limit the item that your kids could buy with their own money while you still can during their early age. After some time, your kids will be used to it and able to identify between emotional purchase and necessities.

4. Learn to give

Not everyone have the habit of giving even for adult. By introducing charitable habits to our child in an early age, they will understand the joyfulness by helping others.

Giving to charity is shown to have pleasing effects on the brain, it will create happiness and joyfulness in them. However, charitable act has to be taught during the early age as kids is able to adapt this act before they start being all selfish and stingy without proper money education.

There are lots of people need financial support from us. We should share the love and joy to the community.

5. Set their goals

Kids might just want to earn money to buy toys and food they like. At this point of time, parents could teach their kids about setting financial goal. For example, parents could allow their kids buying a certain toys when they have enough money, buying toys would be their short-term goal. Other than that, parents could give reward to their children once they have achieve a certain amount of savings or earning in their bank. The reward will be a long-term goal for kids.

Setting financial goals should be trained since young. The demand in a person's mind is unlimited. Therefore, by setting a short-term and long-term goals will encourage a person to save up.

6. Learn about credit

Credit might be a little difficult for kids in young age. However, parents could start educate them with the concept of borrowing and returning. If you provide allowance or earning to your children, try to be as strict and exact as possible. If they are out of money and try to ask for extra cash, remember to get the money back from them or deduct from the next allowance.

There are parents who implement interest to their children's borrowing. This might seems stingy and not lovely as a parents, however, you wouldn't want your children to borrow from others to have an excessive spending. Kids will have to think twice about borrowing money from their parents.

This would help them to learn about credit, borrowing and returning. Think wise and think twice before they start borrowing money or spend the money from the future.

7. Hygienic

Money might be a really attractive things for everyone. However, there are lots of germs on money as we would not know that how many person had exposure with the money. Germs and viruses can be attach on the money.

Although there are lots of cashless payment nowadays, germs and viruses will still exist on your phone (e-wallet payment) or cards (debit or credit payment).