“We were not taught financial literacy in school. It takes a lot of work and time to change your thinking and to become financially literate.” Robert Kiyosaki.
As it has widely been known, the best things in life may be free, but most things cost money. A parent imparts so much to their child-like learning how to walk to riding a bike, and so much more. However, more often than not, the concept of money, how to earn it, spend it and save it may be overlooked. The education system does not teach us that either, which is a puzzle considering that money is central to our lives. Parents need to give their children a head start financially, children who learn to save at an early age have a great advantage later in life.
How does a parent/guardian achieve this then?
- Teach them the concept of Money
What is money? The first step is helping the child understand what money is all about. If your goal is to set your child on the right path financially, it is not simply enough to give them money. You need to make them value money and understand one has to work hard to get it and be disciplined to keep it or grow it. They need to know that “money doesn’t grow on trees.” It is not enough to just talk to them, make them ‘work’ for their money. Let them know how hard you work for your money as well. This way, they will grow up appreciating the value of money and hard work.
When people get older they question why they are putting money away instead of just using right now. Much later, you understand the purpose of saving when we face an emergency or when you have to pass up an investment opportunity because you did not have enough money at that time. That sums up most people’s personal finance training: learn through mistakes. Your kids don’t have to make the same mistakes to learn, let them learn from your experiences.
Depending on a child’s age and interest, help them in understanding that they need to save for what they desire. Explain that saving makes it possible to accumulate money in order to afford something that one needs.
A piggy bank is an obvious choice in training kids to save. In addition, you could also open a Zimele Savings Plan account for the child and help them understand that money can grow over time. A savings product is complimentary to a piggy bank.
The point is to teach your child to prioritize saving instead of impulsive spending. Your objective is to lay the foundation for a lifetime habit of saving.
As the child’s grows older, it is important to explain the idea of saving for an emergency as well. Let them know that as an adult there are always unexpected expenses that come up, teach them to put away a certain amount of their money each time they receive it.
- Setting Goals
When a child sets a goal they are excited about, they are more likely to take the steps necessary to reach that goal as opposed to parents setting a goal they want their child to achieve. Let your kids set their goals, just guide and encourage them. This will create the inspiration to take action and gives them the motivation to achieve what matters to them most. Teach them how to set SMART goals (Specific, Measurable, Attainable, Realistic and Time-Bound). Have them plan to do one small thing each day that will move them closer to their goal. Once the goal is achieved a cycle of success begins, that links a child’s actions to desired results.
Conclusion: Teach children about saving for what they really need, versus buying something right away and regretting it later. It will be enlightening to them that saving money is worth it, and that good things come to those who wait. This will come in handy when the children get older and have to make big choices on their own. The system you choose has an impact on both your child’s financial outlook and character. If you want to pave the way for success in your children’s future, you cannot just hope for the best, instead, provide them with the skills that will make success possible.
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