1. The Promise Stays the Same
The first and oldest rule about money can be the most difficult for young children to understand. The act of sacrificing the present moment for the future can be difficult even for adults to do, but make no mistake that above all else, money is a promise in abstract form. This abstracted promise means that the work you are doing right now in the present moment will pay off in the future. Society would not be able to function without this promise.
Teaching children this concept will help them to better understand why we work so hard for the money we earn, and why it is so important to have a plan for managing this hard earned money. Technology will continue to affect the ways that we make and spend money, but the promise implied by the currency itself will always remain the same.
2. Develop A Plan
What are your goals, and how can your money help you achieve them? Money is a resource that is most wisely used in conjunction with a plan. Teaching children to develop a plan based on their needs or wants will ensure that they become more sophisticated about how they plan to manage the money they do not yet have. Have your kids come up with a toy or a game that they would like to buy for themselves and then work from there. This can be an effective method to combat impulsive spending.
3. Teach Them To Save
Now that your children have planned to aim for something, help them hit their target by teaching them how to save their money. Whether it’s allowance, birthday money or other means, help your kids keep track of the money they earn and where they stand in relation to the goal they have set.
4. Develop Budgeting Skills
By now your kids have learned how to plan to use their money and how to save their money so that their plan can be acted out. This is quite similar to the concept of budgeting, and although your children may not yet have enough responsibilities to put budgeting into practice, this point provides you with an appropriate time to introduce them to how you budget for certain necessities like bills or groceries. Giving your children a picture of how you budget your money will give them something applicable that they can learn from.
One of the best things you can do for your children is to set a good example. When your children become independent and find themselves in an uncertain situation, it is quite likely that they will unconsciously default to whatever it is that they learned from you as a parent. A parent who is serious about teaching their children about money will be mindful about the patterns that they are acting out, because these routines and actions will be passed on in one form or another. A surefire way to get your children to reject the money skills you have been trying to teach them is act in the opposite way.