As parents, how do we ensure a better future for our children? We have to teach them about money. By so doing, we help our kids know the relationship between saving and spending, have an understanding of the value of money, and develop good financial habits along the way. Here are five things we can do to raise financially smarter children.
Start them early.
We have to teach our kids financial literacy while they are still young. Teaching our kids about money does not mean setting up a crash course on accounting for preschoolers. We can make the learning process as natural as possible by taking day-to-day activities and turning them into learning experiences. We can start with toys, like coin banks and toy cash registers, which encourage kids to learn basic math and money skills. Alternatively, we can also include the use of money when tutoring them with their math homework!
Lead by example.
Taking an active role in teaching our kids about financial literacy through baby steps will ensure big payoffs in the future. Seeing their parents splurge on a new gadget every month won’t help in getting kids to understand the value of hard-earned money, but having them come along to a trip in the grocery store where they can see the price differences of common goods may help them ask the right questions and infer the smarter financial decision on their own.
Teach them the value of delayed gratification.
We can’t give our children what they want all the time. They have to learn self-control and delayed gratification. If our children want to buy a toy, for example, we can explain to them how much money is going to be left in their savings if they buy and pay for the toy. By asking our kids questions like, “Is it worth it?” or “How important is it to you?”, they can better evaluate their options and make better decisions. We can also coax our kids out of buying an item they just saw at the store and get them to save the money to buy a toy they’ve been wanting for months instead. Not only will they understand the value of money, but they’ll also likely play with the toy for a longer amount of time because they worked hard to get it.
Give them the power to make decisions.
It’s also important that our kids take our lessons and apply them. Most parents give their kids piggy banks to try and encourage them to save, but BPI-Philam Life Assurance Corporation CEO Surendra Menon had a pretty unconventional approach. He taught his then 9-and-a-half-year-old daughter about finance by giving her seed money for investing. He also gave her free rein over the stocks she wanted to invest in, in the process teaching her the importance of facing the consequences of her decisions. While he and his wife stood back and let their daughter take the wheel, Menon recounts seeing her become more observant about everyday happenings around her, learning to strategize ways to make the most out of her budget.
The moral of the story is not that we don’t have to be CEOs to teach our kids about finance. It is possible to recreate this learning method with our kids, even on a smaller scale. In any given situation, we can encourage them to get to know all of their options, and after a thorough evaluation, have them decide on their own. This way, kids will learn firsthand the importance of responsible decision-making and being accountable for their actions.
Help them open their first bank account.
We can introduce to our children the idea of banking and how a having savings account is a secure way to keep and grow their money. When opening their savings account, we can bring our kids to an actual bank and have them meet some of the people who work there.
Benefits of BPI Jumpstart Savings Account
BPI’s Jumpstart Savings lets parents enjoy the convenience of the Scheduled Funds Transfer facility which credits your child’s allowance from your enrolled BPI account to theirs regularly. This is a worry-free way of ensuring that your child has allowance every day.
It is also especially designed to instill in kids the discipline of saving. It comes with a Guaranteed Savings feature which holds a certain amount in their account to protect their savings from impulsive withdrawals. They can also use the debit card for mobile phone reloading via ATMs when they need to call their parents in case of emergency.
Children who learn money management skills early on have good chances of ending up in a better position financially when they grow older. BPI is and will always be your family’s partner in ensuring that your children have a secure financial landscape ahead of them.