As a parent, you want to make sure that your child has every opportunity available to them for the future. While you may spend time discussing manners, and the importance of education, it can also be incredibly useful for them to understand how best to manage and use money, including in the distant future. Starting this as soon as possible can really help them to understand the importance of being smart with money, as well as how vital it can be to save rather than spend.
Pensions
Your child is only at the beginning of their life, so you may wonder what the point is of discussing this far into the future, but it can really help them live a full life. By instilling the need for a pension in your child, they could understand the importance of money in retirement that bit more, and may also opt to hold a private pension - for more info click here, as well as one that their company might provide, to give them a bit more financial security later on in life. One of the ways you could potentially educate them on pensions is to show them your own pension statements or accounts, as well as the amount you pay into it each month from your standard pay check.
Budgeting
Having knowledge about how to budget, and what it means, can also help your child to correctly manage their money throughout their life. Alongside making your money stretch to meet your needs, these lessons can also aid them in learning to save. This can be accomplished through the use of a weekly allowance, that they could earn via chores, good behavior, and other tasks. If they then see something they wish to buy that is more than their allowance, your child must then learn to put the money aside themselves to afford it. While it can be tempting to buy the item for your child, this won’t help them to learn to become financially independent.
Resisting Impulses
Many people, adults and children alike, fall prey to temptations and impulses on a daily basis. While some may not really affect a person’s life, others can lead to serious debt, as well as potential health problems. At points, these impulses could be used as a means of reducing negative emotions, which is not a healthy coping mechanism. Equipping your child with the tools they need to avoid impulsive purchases, such as the method where you wait a few days and then, if you still want the item and it is within your means, you could permit yourself to purchase it. Impulse purchases can become a real problem if left unchecked, especially when it means that bills or rent can no longer be paid. Finding healthy ways to avoid these, as well as to manage emotions in general, can really help to prevent these consequences from occurring.
The younger a child is when they start to understand the necessity and importance of money, the more likely they may be to have respect for their finances. Keeping your child informed, and using your own finances as an example, can really go a long way towards their own future financial stability.
