Teaching kids about money
We always believe that parents play a crucial role in their youngsters’ life. They are the pillars of love, guidance, and support. They shape and mold their kids’ behavior and development as they know their immense accountability in their offsprings’ life. Parents remain as their children’s consistent mentors more than as a faithful ally because it has always been any parent’s wish that their children do well in life.
when to teach kids about money
One essential life lesson many parents try to teach their youngsters is proper money management. But how soon must elders teach their youngsters about money?
Some parents think money management is too big a topic for a young mind to handle. However, many financial books and even advisors say that as soon as children receive an allowance or keep money in a coin bank, it is the perfect time to teach them the basics of good spending and saving. Parents may start by making kids understand the vital difference between needs and wants. This concept will surely help kids make appropriate financial decisions in their young and adult life.
Needs vs. wants
To begin with, parents may describe needs as necessities like food, shelter, and clothing, while wants are everything else that isn’t crucial to one’s survival. Some examples of wants are a bigger television screen for entertainment or designer clothing for warmth and protection.
Teaching youngsters about money, though, requires constant and frequent discussion. One perfect timing is when making a purchase. It helps when elders give their children an idea why they opt for a new pair of cheaper but of the same quality pants over a branded one. Such conversation will help kids learn how factors like price, product quality, and survival needs must be considered when spending money. Frequent yet straightforward discussions between needs and wants will set children up with proper financial priorities, which will be helpful later in life.
Save money to spend
Once children already understand how to distinguish needs from wants, it’s time to go to the next level: help them save money to spend. This is how elders relate the concept of needs and desires with financial skills.
It is prudent to teach and ready kids how to fund their needs and wants. One way of doing this is by explaining to them the value of saving money. Financial consultant Fitz Villafuerte suggested one helpful way to teach kids the “three piggy banks” approach.
the three piggy banks approach
One piggy bank contains savings for needs. A second piggy bank has savings for wants. And the third one is for charity.
Yes, giving or donating to a cause is as rewarding as saving for the needs and wants. More than supporting the causes one believes in, savings for charity also has a positive effect. It reinforces personal values, making us feel we are living true to our ethical beliefs. Teaching kids to donate likewise shows them that they can make a positive change in the world at a young age. Nurturing their innate generosity will make them grow up with a greater appreciation for what they have and what they can do for others.
The concept of savings account
After grasping the three piggy banks concept, parents eventually need to move their children to an existing savings account. And since today’s children are growing up in a digital, information-dependent world, they also need to know the basics of bank savings.
BDO makes it easy for parents and kids to open a Junior Savers Account with an affordable initial deposit and maintaining balance. Parents or guardians can set up a Junior Savers Plan to help their children grow their savings. They can also automatically deposit money from their BDO Online Banking account to their kids’ Junior Savers account based on a set schedule for transfer and the amount to be transferred.
Start them young
Knowledge of financial management is an essential skill that may help us navigate life. Teaching our kids how to handle money and instilling in them the vital habit of saving at a young age is doing them a favor and saving their future. Do it not for you but for them.