Lead by example
Contrary to what many parents thought, toddlers by as early as 14 months, are masters at reading social cues. This means that children often observe and take the cues from parents’ life habits. If your financial situation is consistently in a bad shape, you are not going to convince your child when you try to educate him/her on financial prudence. Always remember to walk the talk and lead by example. If you want to inculcate good saving habit in your child, make sure that you practiced it as well. Reduce your debts and closely monitor your expenses. You will be surprised that over time, you child will pick up these good habits even if you didn’t tell him/her.
Occasionally, point out to your child the difference between needs and wants. If your child can appreciate the difference, he/she will be able to appreciate the value of money and reduce impulsive spending.
Budgeting is a learn-able skill and parents are the best persons to teach this skill as it is often not taught in school. You can start off with simple budgeting by teaching your child how to plan weekly expenses for food, stationery supplies and clothes.
Try to reward your child if they accomplished little tasks set by you. The amount can be as little as $1 coins so that the child can appreciate the value of exchanging hard work for monetary rewards. Setting achievable tasks and rewarding your child would also encourage them to save diligently. Buy piggy banks for your child and let them drip feed them. Over time, after your child accumulate lots of coins, you can open a bank saving account for your child and deposit the coins. Having their own saving accounts is important as it gives children a sense of ownership. Tell them that with the extra money, they can buy something they want to buy.
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