Society is undergoing a digital transformation in nearly all aspects of modern life, including the economy. Your children today will grow up in a world that’s more competitive than ever, and your role as a parent is to make sure they have the life skills to thrive in it as soon as possible.
One of these skills—financial discipline—is unfortunately seldom taught in primary or even secondary schools. A parent is in the best position to teach their child the latter’s first lessons on how to be financially literate and financially responsible, especially in situations that involve the day-to-day activities of the household.
This guide offers practical and engaging strategies to help parents instill financial discipline in their children, with the hope of preparing them early for financial independence and freedom.
1) Start with the Basics of Finance
The concept of financial literacy need not be an overwhelming one for parents and children as long as it’s taught in an age-appropriate way. You can begin with foundational concepts like money. For preschool-age and kindergarten-age children, discuss the different values of money and how money is used to buy what one needs. You can also differentiate between wants and needs and facilitate a fun activity with your child wherein you classify different things as one or the other.
Older children, meanwhile, may be mature enough to understand concepts like earning, saving, spending, and investing. Use simple, everyday examples to illustrate these ideas. For instance, when they receive birthday money, discuss the importance of saving a part of it, spending wisely, and perhaps setting a small portion aside for giving to charity.
Initially, use physical money to help them grasp the tangible exchange before transitioning to digital transactions. This hands-on approach will lay a solid foundation for their financial education.
2) Set Financial Goals Together
Goal-setting is a key step in teaching financial discipline, whether to adults or to kids. Help your own kids set both short-term and long-term goals for themselves to motivate them to save. A short-term goal might be saving for a toy, while a long-term goal could be saving for a bicycle or pocket money for an upcoming family trip. Encourage them to track their progress and celebrate milestones along the way. This will teach them the value of delayed gratification and keep them motivated to save even more.
Allow them to develop both the skills and sensibility for saving up often by opening a digital bank account with them. Teach older kids the basics of how to use a digital banking app like Maya. In the app, you can use Maya Personal Goals to open temporary goal accounts that your child can personalize. For example, they can create a personal goal and name it “Gaming” to allocate savings to buy a new gaming console.
After each deposit into a goal, the counter advances to indicate how close your child is to reaching 100 percent. Visual aids like these can be particularly effective in making goal-setting engaging and fun.
For important long-term goals like a college fund, you can set up a higher-yielding time deposit to keep your kid’s money secure and growing. In doing so, you can put a hedge against yearly inflation, which diminishes the value of money over time. Explore a product like Maya Time Deposit Plus and let your older child know about how money is being saved and compounded for their education and for better prospects in their career.
3) Provide Your Kids with an Allowance
A weekly or monthly allowance is one of the easiest and most practical avenues for teaching kids money management. Set aside a regular allowance that is appropriate for their age and year level, and discuss the rules around it. For your kids who are old enough to have a smartphone, consider transferring a part of their allowance to a digital wallet like Maya. Given how popular cashless apps now are, it’s good to give them the opportunity to manage some of their school expenses from their e-wallet.
Plus, if your kids use Maya to spend their allowance, they’ll be able to save more from higher interest. The app also makes it easy for kids and parents alike to easily monitor and manage the former’s spending and saving habits.
Whether you give your kids a digital allowance or actual money, encourage them to save a portion of their allowance each week. You can also introduce the concept of budgeting by dividing their allowance into categories—saving, spending, and giving. This exercise will teach them to prioritize and make smarter financial decisions at the everyday level.
4) Learn How to Use Kid-Friendly or Student-Friendly Digital Finance Tools Together
Today’s techy parents can also learn how to use digital tools to teach their kids financial literacy. There are several kid-friendly and student-friendly budgeting apps and online banking options available out there, like Maya, that can make learning about money easier and more interactive.
Through tools like these, older and younger kids can benefit from hands-on ways to track their spending, set savings goals, and even earn interest on their savings in a controlled environment.
5) Teach Your Kids the Value of Work
One of the best ways to instill financial discipline in your kids is to teach them the value of work. As their parent and pretend boss, you can link their allowance or rewards to age-appropriate chores. This helps them understand the connection between work and earnings.
For older kids, on the other hand, consider encouraging them to take on part-time jobs or entrepreneurial activities like selling crafts online. This not only provides them with avenues for practical experience but also teaches responsibility and the value of hard work.
6) Set a Good Example for Them
Children learn a great deal by observing their parents. As such, set a good example by demonstrating responsible financial behavior.
Discuss your financial decisions with them, whether it’s budgeting for a family vacation, saving for a big purchase, or choosing not to buy something unnecessary. Involve your kids in family financial planning to provide them with a multitude of practical lessons.
Then, show them how you budget, save, and invest. Transparency about your financial choices lets them in on some valuable insights and encourages open communication about money, spending, and committing to one’s financial goals.
Teach your kids financial discipline by incorporating strategies like these into your daily routine. These efforts will help your children develop a solid foundation in financial literacy, which they will benefit from long before they become adults.
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When is the best time to start learning about money?