For many people, personal finance seems to be a foreign concept or a serious venture that sounds too complicated for them. Being daunted by the task of managing their finances seems to be an effect of being intimidated by money.
To encourage a healthy attitude towards money and managing one’s own finances, parents should teach the concept of personal finance. It doesn’t matter if they parents themselves are having difficulties with their own. By teaching their children how, they can in fact be motivated to manage their own finances better.
One’s attitude towards personal finance will have a profound effect on the quality of life a person will have as he grows older. This is why it is never too early to teach it to children.
Parents can start with simple things such as explaining to a pre-schooler why they won’t buy that toy or something that the kid wants them to buy even if they can. Concepts of income and budgeting can be explained in simplified terms that children can grasp.
When kids start getting their allowance, they can already actively practice personal finance on their own. It can start with a simple task as tallying their daily expenses to see where their money went.
Better yet, children can start making a budget even before they spend their allowance. To begin with, they can declare the percentage of their allowance they intend to set aside and put that straight into their savings. The rest of their money they can spend as they wish on food, treats, or things for school.
Finally, to give children a sense of accomplishment while demonstrating how serious having savings is, parents and kids alike can go to the bank and open a savings account. For a kid, this can be an awesome experience. Going into a “grown up” place, getting a savings account, and seeing his name on a bank document will give him a sense of having achieved something. All this will further motivate him into maintaining the habits he learned about personal finance.