COVID-19 pandemic has made our lives difficult. However, it has also allowed many parents to spend more time with their kids. Financial advisors say there may never be a better time to teach your children about money than now. But what financial lessons should you be teaching them?
So as you keep your kids from watching TV all day, it is wise to include basic financial skills in your lessons. But since many parents are still struggling financially, it may not be easy to discuss money with your kids.
Parents who have successfully talked money with their kids say it pays to approach the discussion head-on. They say you don't have to get into every detail of your financial challenges to get them onboard. So, what money lessons can you teach your kids right now?
Differentiate Needs From Wants
This is an important part of financial lessons. When making cuts to your budgets, you're prioritizing what is necessary. And that is the right place to start money conversations with your kids.
Explain to them the difference between needs and wants. Tell them why you're making cuts. It will help them develop smart money spending habits.
Even if the pandemic hasn't hit your wallet hard, find examples of people who are reducing their expenses. You can even ask your kids if they know families who are cutting back on spending, and if so, how and why. Children are very observant.
How To Make Money
The job market has changed tremendously since March this year. Normal jobs for teens may no longer be available and your kid may be worried about the future.
If that's the case, it may be a good opportunity to talk to your teen about other ways to make money in your financial lessons. Encourage your kids to come up with ways to make some extra cash. This will help them develop entrepreneurial skills.
There are many ways to make money right now. For example, raking leaves, tutoring, childcare, and mowing leaves. If they find ways to make money, encourage them to pursue them. It could be what they need to get through these uncertain times.
Prioritize Yourself And Your Goals
Apart from finding ways to make money, teach your kids to pay themselves first when they start earning. That means putting some cash aside.
This will help them learn to prioritize themselves and their goals. In your financial lessons, make your kids understand that when they save money now, they will have the freedom to do other things in the future.
You can use your strategies to illustrate this. If you're spending less money by not traveling, paying for childcare, or eating out, show your kids where that money is going. Tell them what you're doing with the savings and your plans after the pandemic.
Live Within Your Means
This is one of the most important financial lessons to grasp. Tough economic times reinforce the benefit of spending less than what you earn. That's a message that you should help your child understand.
Show them that if they spend less than they're earning, they can create a buffer against unexpected occurrences such as sudden job loss and reduce stress.
Explain to them that if they live within their means, they will not fall in the trap of taking on unnecessary debt which may compromise their ability to achieve other goals such as saving for retirement and to buy their first home.
Setting Financial Goals
It is easy to save money when you know why you're saving. As you teach your kids about eating healthy and exercising, show them the benefits of setting a financial goal, and working towards achieving them.
For example, you can tell them to start saving for college, first home, car, or vacation. This will keep them remain focused on their goals.
As we spend more time with kids at home, it's the best time to teach them about money. What strategies are you using? What more financial lessons would you recommend to parents?