1. Be a role model
According to studies, money habits in kids are formed by the time they are 7 years old. Kids always follow their parents and copy whatever they do. They will notice if you are spending too extravagantly, and are not saving much, or, if you are having an argument about money with your spouse. Also, they are there when you use your plastic cards to pay every bill, so they will eventually notice. Therefore, try to be a good role model for your kids, and they will learn the good money habits from you.
2. Save money in a transparent jar
It is great to use a piggy bank to save money, however a piggy bank doesn’t let the kids see the money growing in there. In contrast, a transparent jar lets the kids see how much they are saving. Talk to your kids about it, and see them get all excited about the growing money. Through the jar they can see their four dimes, and a quarter, which yesterday were just three dimes, and this will inspire them to save more.
3. Make them understand that nothing is for free
You don’t need to lecture them every time about the prices of the stuff that the kids have bought. Rather, ask them to a take out a few dollars from the jar, and make them pay this money to the cashier in the return of the toys that they want. This simple act will make them understand that there is a value of each stuff, and they should spend wisely.
4. Stay clear of impulse buys
You are visiting a supermarket with your young one, and suddenly you hear her scream from the backseat of your car – ‘Mom, Can we buy that cute dress?’ – happens often? At this age kids make a lot of impulse buys, particularly when it is not their own money.
In such a situation, make your child understand that they can buy the dress, but they need to pay for it with the commissions that they earned by helping you in the household chores. And, suddenly you will find them saying that the dress doesn’t look that cute anymore, and there is no need to buy it. Also, ask your child to wait for at least a day before making a big purchase, as this will allow him to take the decision with a level head.