Personal Note: This is a beautiful personal finance article by Kevin. I believe the last paragraph of the article aptly summarizes its whole content, and I would like to quote it again: “A family's attitude towards money has a powerful influence on a child from a very early age. Teaching our children about the proper use of money will help them develop their money skills, be more responsible and disciplined. Education is the key to developing healthy money habits in your people. You can never start teaching them too early.”
By [http://ezinearticles.com/?expert=Kevin_Goh]Kevin Goh
In today's fast-paced and changing world, every parent wants to help their children become successful adults. Financial literacy is a life skill and teaching children about the proper use of money should start early. So when do we teach the fundamentals of finance to our children? From a very young age, children can learn many things from their parents, including the way you deal with your finances. Here are some ideas to help you focus on personal financial education with your child at home.
1. Money doesn't simply appear
Time is money and money is time. Something has to be traded for it. As working parents, we sacrifice our time for the money we earn. Teenagers will begin to grasp the relationship between time and money but with younger children, you can start by asking them to do simple chores around the house. Pay them for their labour and reward bonuses for their level of performance. They will learn the difference between doing job and doing it well. The earlier your children realise that precious time given up for money is gone forever, the better prepared they will be when they get their first job and spend their income accordingly.
2. Lead by example
Let your children see you dealing well with money. Explain the difference between needs, wants and desire. Help your children understand the value of things. If they hear you lauding the merits of consumerism, they'll get the message that labels are important. Teach them about good consumer habits. At the supermarket, make them compare prices. What is the best buy? is it value for money? Did you know that the most expensive items at the store are usually at eye level? This is the best way to encourage them to save and spend wisely. Let them see that money doesn't grow on trees and there is a limit until you have worked to earn more.
3. Be as open as possible about money at home
Talk to your children about how much things cost, and how long it will take for you to save for those items. When your family sets goals, include everyone in the discussion. Give your children challenges and suggest they only have a certain amount to spend. They will realise they can't buy everything they want. Amplify this lesson during a vacation. Set a budget and let your children decide whether they want to stay in a posh hotel or participate in a unique activity while travelling. Keep records of the holiday expenses and let them see the total cost of the trip, the cost of food and accommodation. By learning about the choices they have to make with their money, they will begin to see priorities and not over buy.
4. Have fun, play The Game of Life or Cashflow for Kids board games
Teach your children about more complex concepts like compound interest and proper cash flow management, understanding the basics of investing in stocks and shares, real estate and other businesses. As your children become familiar with these subjects, have discussions with them about the activities they are interested in and turn these activities into a business or a career ambition. This encourages marketable skills and motivates your children towards working extra hours on gaining those skills. Enrichment courses such as speech and drama, arts and craft, creative writing and many others will help your children develop their confidence in speaking, writing and communicating, all of which are essential for their future. The more your children play, the higher their financial IQ will become.
A family's attitude towards money has a powerful influence on a child from a very early age. Teaching our children about the proper use of money will help them develop their money skills, be more responsible and disciplined. Education is the key to developing healthy money habits in your people. You can never start teaching them too early.
Kevin Goh.
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