Money Management Skills at Home

Money Management Skills at Home

Money, money, money (me singing “For the Love of Money” by The O’Jays). Several subjects should be taught in school and at home, such as life skills, time management, mental health, self-love and self-awareness, and money management. 

Finances are a huge part of our lives. As parents, we do our children a disservice by not preparing them for the real world, including having realistic conversations. We should establish a robust foundation of financial literacy to harmonize with wise money moves and generational wealth. Through building positive financial habits and encouraging entrepreneurship in our children, we help the next generation build the right skill sets for economic ambition and financial navigation.

By setting up suitable early investments, we ensure that no matter how unpredictable the future is, our children have a cushion of certainty to pursue life goals like education or retirement. Here are a few practical steps for instilling money management skills at home, the benefits of early budgeting and savings, and the value of transparent discussions about finances.

Start Early

Introduce money as a concept so your little ones can understand commerce and money management.

Through role playing games, like owning a bakery, your children can start to understand how money is used practically. Through board games like Monopoly and PayDay, young kids can learn the concepts of investing, mortgages, bills, and loan payments.

Practical Budgeting

Budgeting best practices can be incorporated in minor cases, like sharing your approach to your monthly grocery budget. This helped MJ better see that going out to eat every night is unhealthy and unrealistic financially.

Savings Jars

Introduce the concept of saving early! While it may seem traditional, savings jars remain an effective method.

Mimic savings accounts by labeling each with goals or purposes like “Holiday Gifts,” “New Shoes,” or “Rainy Day.”

Hands-on Experiences

There is no better time to learn the values of entrepreneurship. Setting up a simple lemonade stand or participating in local craft fairs teaches your kids about earning money and instills a sense of responsibility and creativity. MJ being responsible for negotiating pricing for his old clothes, shoes, and toys during our yard sale was a great way of showing him responsibility and financial literacy.

Elevate their sense of ownership by putting the agency in their hands and supporting their initial business adventures.

Allowance Management

Provide a regular allowance, however small, to mimic income and encourage your child to manage it independently.

Just like budgeting and roleplaying, they must go through the motions of separating their money, saving for the future, and understanding the consequences of impulsive spending.

Open Communication

Taboos around money perpetuate a lack of understanding about how money works. Wealthy families consistently discuss money matters. Transparency helps build trust and healthy, money-minded discussions, preparing them for when they become adults.

 

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