The way we handle money is often influenced by our values. For example, people with a focus on financial security may save their money and people who prioritize self-expression may spend it freely. Understanding where our values come from can help us make good decisions about how to use or save money in the future.
In this 2nd part of our 8 week financial literacy series to help parents raise money-smart kids, we have listed 3 values that we feel can help you teach your child to increase their financial literacy knowledge. There are as follows:
1. Being sensible
It means living within your means and saving for the future. Financial prudence is exercising careful and practical judgement over matters that concern money. Keeping your finances in order is an important part of life. It's something that many people don't realize until it's too late but taking care of your money now will help you avoid problems down the road.
For example, starting a budget with your children by listing down their monthly allowances and expenses. They will understand that a budget helps them to have an overview of their monthly expenses and where does their money go each month. This will help them identify any areas of overspending or unexpected costs. It also helps by showing how much money is left at the end of every month for savings. At the end of every month, sit down with your children and review their budget and find ways on how to constantly improve it. This will help them become careful and have practical judgement over matters concerning money.
2. Being accountable
We all know that a lot of people live paycheck to paycheck and have little to no savings. It can be hard for them to afford life's necessities, let alone pay off debt. But there are some things we can do now that will put us on the right track financially. This is where accountability comes in. We can hold ourselves responsible for the way we use and manage money by creating budget. Accountability is staying full course on committing to your goals no matter what.
For example, teaching your children the difference between a ‘need’ versus a ‘want’. This can be practiced when you’re out shopping with them, and they want something. Ask them if that item is a ‘need’ or a ‘want’ and explain why it is so. This would make them understand the difference and prepare them to make better purchase choices in the future.
3. Being resourceful
Saving money does not mean we have to be downright stingy to ourselves and forget to enjoy life. We can find ways to be resourceful. For example, going the D-I-Y route, bartering your skills, repairing things before throwing them away, simplifying celebrations, repurposing items, creative gifting, and many more.
For example, your children can look at earning pocket money during school holidays by simply doing chores around the house or even encourage them to finding ways to earn extra income for example, selling cookies or lemonade during school holidays or offering to wash cars around the neighbourhood during weekends. This will help them develop their entrepreneurial skills which teaching them how to earn and how the money earned contributes to their savings.
Let incorporate these values onto our children and hope that it helps them become more financially literate and grow up to be financially savvy adults.