Learning how to deal with our finances isn’t something that happens overnight. We definitely need to make some mistakes to understand what we should do with our money. The problem is when we make those mistakes in our adulthood, and let’s be honest, we all have been there. So, the only way we can prevent this from happening to our kids is by helping them to make financial mistakes while they’re young. The mistakes we want them to make are: having wrong priorities when it comes to buy things and not budget their money properly. How can it happen?
First- Earning the Money
Giving them a certain amount every month will mimic our salary.
Give them chores that they don’t normally do and pay them for it, this will be similar to our extra hours at work.
Second- Their Goals
Help them write down all the things they want to buy, whether that’s toys, clothes, etc. Try to include something that would be in their “needs” category, if they were an adult.
Have them write down the priorities of what they should get first.
Ask them if they think they should have a budget or not. If they think they do, help them make it but stick to what they think it’s correct.
Third- The Mistakes
They will understand that their priorities were wrong (because they’ll most likely choose something that they want instead of what they need to be on top of the list). They will also understand that they need a “Plan of Action” aka a budget to get what they need.
Acknowledge their mistakes will help so much in their future. They’re going to need you to explain how things should be done, and don’t forget to show them that the mistakes they made were good and that they should be proud of themselves for being able to recognise and overcome them.
Now that they’ve done all this, encourage them to not give up and give them a present or something they’d love to have. Dealing with finances will become a positive thing for them!
Thank you for reading it, and I’ll see you in my next post.