With life lessons and studies, parents also need to focus on teaching their children about money. The lack of financial literacy is what causing the increasing debt rates among youth these days. By informing them about credit, debt, and budgeting, you can instil good financial habits in them from the start.
Parents play a vital role in increasing awareness regarding money in their kids, as there are not many schools that teach such courses at a basic level. Here are some tips that you can utilize to raise financially independent kids.
1. Do not Meet All Their Demands
With infants, you need to ensure to meet all their basic needs. But when it comes to kids, it is not necessary to give them all that they desire. When kids get everything in a silver platter, without struggling for it, they tend get excessively dependent on their parents. They do not make any effort to make something of their own, even when they grow-up. In such situation, the parents are the one who suffer and struggle to make the dreams of their kids come true. Parents want to give their child everything. Sometimes, it is easy to give in to their tantrums and wishes, but it will not help them grow in a responsible person.
2. Give Them Monthly Allowance
When you give your child a monthly allowance or pocket money, you give them a chance to have a hands-on experience on handling money. Teach them about saving and budgeting, which will make them a responsible person from a young age. The allowance does not have to be a lot; it can be $10 a month. Moreover, they should know about the useful things they could invest their money in. Once they learn the right way of using money, your goal is accomplished.
3. Inform them about the Sources of Money
Kids do not think that money grows on trees, but they also do not know that it is a finite resource, which your need to earn. Their parents instil this awareness in them. Talk to them about your journey, and the jobs you did because of which you are earning the money. Money cannot be achieved without making efforts, and there are no shortcuts in earning it either like a special place will unlimited flow of cash. You have to give your time and struggle to earn every penny.
You can teach this lesson by giving them things they wish for when they achieve a milestone such as a good result, minor household chores, or some outstanding accomplishment. Other than positive reinforcement, this will also teach them how things work in the practical world i.e. working for things you want.
4. Be Financially Independent Yourself
A kid learns more from your behaviour than your words. By following your own advice, you will be able to show them all that you mean. So stay in the budget, limit your shopping expenditure, and calculate your finances on a monthly basis.
Financial independence will help your kids built their future and take responsibilities of things, instead of being dependent on others and blaming them of things that go wrong.