Teaching your kids about money
MANILA, Philippines – Credit card debts, overdrawn checking accounts, missed loan payments – these are costly mistakes you don't want your children to make when they grow up.
Teaching your children about money as early as possible will help them form good habits they will carry for life.
According to Mylene Lopa, chief marketing officer of Sun Life Financial, you should teach your kids about money when they start asking you to buy them things like toys or candies.
Mylene says, “It’s the perfect time to teach them that money doesn’t grow on trees, and that when it comes to buying things, you need to prioritize because they can’t get everything they want.”
Start simple. Expose them to the following basic concepts:
Prepare packed lunches for your kids in school, but give them money, too. Giving your children allowances is a good way to teach them how to be financially responsible.
“So the small allowance should just be enough to buy them a treat, like a juice or a biscuit. It’s for practice more than anything,” Mylene says.
Make it clear what expenses the money is for. Tell your kids about the rewards of saving some of that money.
As your children get older, they will ask for extra funds for school requirements, extra-curricular activities, and even gimmicks. Mylene recommends setting aside a “discretionary fund” for these, but it should be within your household budget. READ: Creating a monthly budget
Older kids can be trusted with larger amounts of money for longer periods of time. “Teach them how to budget by giving them their allowances for a week or a month,” Mylene says. “Then it’s up to them to learn to use it wisely.”
Should they ask for more, ask them to justify the need.
Buy your children piggy banks.
Piggy banks are cute and colorful, making saving a fun and positive activity for kids.
Encourage your children further by bringing them to the bank and showing them how to deposit their savings themselves. “It makes them feel more grown-up and they love it," says Mylene.
Once they've saved enough, let them decide what to do with their money.
For children, earning usually comes in the form of gifts they receive for good grades or behavior. Be cautious and give sparingly.
“Material rewards should be saved for extraordinary achievements,” Mylene advises. “Like if they top the class, or they really went beyond the call of duty to help.”
Mylene adds it’s hard to reward kids for things expected of them “because then they start to have a sense of entitlement.”
The concept of investing can be introduced to kids by analogy. “Investing is like tending to a plant,” notes Mylene. “You protect it, water it, and over time, it grows bigger and can even yield fruit.”
Teach your children the concept of setting aside money for a bigger goal in the future. Tell them you are working hard today to prepare for tomorrow. READ: The 20-something’s guide to money goals
Along with these basic concepts, the best way to teach kids about money is by being a good example. Avoid borrowing money from other people, and use your credit card responsibly.
It’s hard to teach kids about saving if they see you splurging and borrowing all the time. Inspire them to spend wisely and motivate them to plan for their future.
When it comes to money, it’s ideal to start them young. – Rappler.com
For more tips on how to achieve brighter finances, family life, and health & wellness, visit www.brighterlife.com.ph