3 Things you can teach your kids on Money
According to studies, one of the most important lessons that a parent can impart to their children is financial responsibility.
It has always been said through and through that “the sooner the better” is the way to go when you want get ahead, may it be sports, academics and finance because time compounds. Here are three of the things you can teach your kids about money.
1 Teach your kids the Value of Money
For us Filipinos, we know that money is hard to earn but we always want to give our best for our children. It is an open secret that we go all the way overseas to work so that we can provide them a good future, if not the best.
Most of the time, Filipino children do not realize these facts because the parents don’t get their children involve in the family’s decision making. It is our culture that it is this way but it would be best if the children would join so that he or she will be aware of the family’s situation, physically and financially. Let them join the budgeting or let them do the budget itself.
“For the things we have to learn before we can do them, we learn by doing” – Aristotle
Money is hard to earn, it’s a universal truth but our children will only realize this by the time they are earning their own money.
2 Teach your kids about Banking
Introduce them to money by giving them an allowance and opening their savings account. Communicate to them that 20% of their allowances should go to their savings account that they can use in the future and also another 20% to represent money that they cannot spend (just like taxes).
Example, if you are giving your kids 100 pesos per week, ask them to give you the 40 pesos so that they can feel what we adults feel when our paycheck arrives. This gives them the sense of what the real world is and gives them an idea how it works.
Quick tip: Give their allowances in small portions so you can encourage saving.
3 Teach your kids on how Investing and Lending works
Sounds hard? I didn’t mean investing in the stock market of course! It can be as simple as getting government bonds and let them see how it earns over time and how other people make their money work for them. This is the same case, as when they try to borrow money from you when they are going to buy something- in this case ask them for interests, even if it just 1%. In this sense your children can already see how compounding interests works on both levels.
Teaching our kids finance is both easy and difficult task, as they are still developing and absorbing knowledge like a sponge. The fact is, developing their financial habits at an early age is easy but controlling our actions during the process can be troublesome. Knowledge on finance is just a kick start- but in everything that we want to achieve, attitude is always key in which our habits dictates.