Financial intelligence is not something often taught in school, that is why it's so important as parents you teach your children valuable lessons about money. Money is the only currency we have, and thus life is extremely difficult if you don't know how to manage yours. Fortunately, children are like sponges and teaching them good money habits young will stay with them for life.
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1. Implement savings jars: saving, sharing, spending
Children have had piggy banks for years, but we believe you should elevate the pig to a jar. We like using clear jars to save money that way your children can visibly see the fruits of their labor. We also believe in having not just one saving jar, but three. The first being the standard jar that teaches your kids to save for the long term. This will mimic how one might save for retirement. The second jar is for sharing. This jar is to teach your children the value of giving back, and they can use it to donate to a fundraiser or friend in need. This jar will mimic the adult version of taxes. You can explain this to your children as well, that adults pay taxes that go to support teachers, police officers and fire fighters. The third jar, and perhaps the most exciting, is the spending jar. That is where they can use that money for anything their heart desires. If they want a new transformer, well that's the jar they can spend from. When using the three jar method explain to your children that they need to split the money they earn from birthdays and chores evenly into the three jars. This will help them understand more complex finances as they get older.
2. Set a good example
Our second tip is to lead by example. Yes you have a bank account, savings account and you pay your taxes, but that isn't always visible to your children. Make sure Mommy and Daddy have a jar where they save money for something that they want too. You don't need to put a ton of money into the jar, it's to show them that no matter how much money you earn, you will always need to save and budget.
3. Teach them patience
Patience truly ia a virtue and children respond poorly when they do not get immediate gratification. Try to break this habit by helping them set goals with their money. Maybe your 6 year old really wants an iPod, that's a very expensive toy. So teach them they can start saving for it and help them map out how long it will take to earn enough money. Setting goals is just as important as saving money. And when they are tempted to spend half of the money at the candy store, remind them of the bigger picture.
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4. Teach them to prioritize
You will need to teach your child how to set goals and then prioritize those goals. For example if they want an iPod and a new pair of sneakers, they'll need to figure out which one they want to save for first. Most kids want fun over practical, but that isn't always how life works. By teaching them that the sneakers are more of a priority, you are setting them up to make much wiser financial decisions later in life.