The value of money keeps on changing and would keep on changing in the future as well. As adults, parents understand inflation, conversion rates and the strength of currencies. Meanwhile, kids only understand the value of money as expressed by their parents.
A study conducted by the University of Cambridge stated that money habits in children are formed by the time they’re 7 years old. If the parents are swiping down their plastic card every time they go out to dinner or the grocery store, the kids would eventually notice. Or if the parents are arguing about money, the kids would notice that too. Parents could set a healthy example for their children and there will be increased chances to follow these tips when they get older.
Kids learn how much their parents could afford to spend from there early days as well. Some parents are honest with their kids about their financial condition, others do not want their kids to know about financial hardships and want to provide every possible comfort that their kids long for. Children, however, are very spontaneous and would definitely figure out what the financial condition of the family is in their later days if not understood early.
A child from a family that never lacked money but has suddenly come across with some financial adversities, would find the restrictions on what they could spend troubling. This is usually because they have never realized how important money is to do the most basic things. In these situations, parents must sit down and explain the situation to their kids so that they could understand how they must take control of their expenditure until things are financially stable again.
Adults view money as they did when they were children. It is a fundamental understanding that, if as a child there were tight limitations on how much people could spend, as an adult, they would generally be more careful with money because they have experienced life on a tight budget.
The general doubts:
So as a parent, should they be absolutely honest with their child about the financial situation of the family? Or should they not let them know at all? Or should the parents let them know how much they could spend but not let them know if times are tough? The most important question is how do they educate them to value money but not be miserly or wasteful?
Telling children how much they could spend in a month by giving them pocket money helps kids regulate spend. It also teaches them how much the money is worth to them in terms of everything they would like to buy.
Kids don’t need to know the struggle of exactly how tough their parents have it the money, it might create a mindset in them where they would develop a feeling like money is something that must never be spent or spent cautiously. Kids must understand that everyone has a budget that they must stick to, including themselves. And pocket money helps them regulate these cognitive developments.
Children must also not believe that if their parents are wealthy and well-to-do, then the money is nothing to worry about, that would lead them to do wasteful spend without a doubt. Whether parents are financially secure or having a difficult time must not be how children learn to value money. They must learn it from making decisions themselves on what they could purchase and learn to make sacrifices so that they could save for things that are expensive. If parents give in when asked for more money, children would never learn the value of money as they only need to ask to receive more money.
Having children do chores to earn their pocket money is also a great idea. This way, kids learn in their early days about, how money is earned. They could learn that they must do tasks to earn money and that they must spend that money wisely to make it last between paydays.
Basically, parents should let children learn what money is and how it should be spent based on their own experiences and not from their parents.
Fixing a suitable amount of pocket money:
This method would work well only if the pocket money they receive is also appropriate for their age and needs. Parents should calculate a suitable budget by viewing their needs and expenses against the duration to their next payday.
If a child would receive far more than he could ever spend, the lesson would get lost and the child would never realize how the lack of money could cause restrictions on their luxuries.
If on the other hand, the child receives far too little for their needs, they would think that money is always going to restrict their actions and begin to live sparingly. Any parent would mind that because parents require their kids to learn the value of money but don’t want their kids to bear hardships during that learning.
Understandably, if times are very tough, parents might not be able to give the child enough pocket money. During these circumstances, children should be encouraged to do part-time jobs so that, they could earn pocket money. This teaches them about how money is earned in a much more significant way than chores do. It is to note that, most jobs are not suitable for children and only a few are such as being a library assistant, dog walker, receptionist or software tester are better for the kids. Hence, parents should keep their vigilant eyes open, when they allow their kids for part-time work. They could get the idea of some safe jobs that don’t put a lot of physical strain on children.
We know being a parent is a learning process and want to make it a little easier for you. So here is our blog full of tips, tricks, stories and much more to help you through parenthood!