All of us understand the importance of money. But as adults we also understand that it is not the only and most important thing in life. How do you explain it to your kids? Here are a few steps that will help your kids to understand money’s value and the importance of financial planning in life.
3-5 years old
When a kid is three to five years old, he/she is slowly beginning to identify and make sense of the things around him/her. This is also the right time to introduce them to money by letting them identify coins and their values. These formative years are the right time to impress onto them that people actually earn money by working so that they would understand the concept of having to wait for something they really want. This is also the right time to teach them about their wants v/s their needs.
6-10 years old
When your kids are in the six to ten years range, it is time to have a discussion about their allowance. The discussion will naturally explain to them the choices they have on how to spend their money. Not only that, they should also be taught to make price comparison and to decide for themselves about affordability of things. Some will deem it too early but we believe that it is also the right time to open a saving account for your kids.
11-13 years old
When your kids are pre-teens or tweens, it is the time to teach them the importance of saving. You can start by asking them to save at least ten percent of their allowance. The easiest way to get them started on saving is by goal setting. Ask them to save for something they want so that they learn to value hard work as well as to not spend money they don’t have. You should also teach them the importance of privacy and security, among other things.
14-18 years old
In their teens, your kids should learn to do most of the basic financial planning of their lives. This is the time when most of them will get their first job so it is importantfor them to learn to create a budget. They should by now know how to write cheques as well as understand digital money. They should by now be aware of avoiding credit card debts and have a sense of interests and taxes and how it affects your income.
Young Adults
By the time your kid turns into a fine young gentleman or woman, they should be aware of their credit scores and how they can improve them. This is the time they will be make important financial decisions for themselves like buying a car or even renting a house. So,by now they must be fully aware of their financially responsibilities and commitments, while having an emergency fund to last at least a few months.
