8 Ways to Teach Your Children Everyday Financial Discipline

There are numerous benefits to teaching your child about money management from an early age. For one, equipping them with the tools they need to handle their resources well sets them on a path towards financial independence and success. For another, it provides them with valuable skills that can have a profound impact on them as they navigate the complexities of the modern world.

Today, it’s an option to use an array of tried-and-tested techniques, as well as modern methods and tools, to help your kids gain a basic understanding of how to handle their finances responsibly. To illustrate, here’s a list of what you can do to instill financial discipline in your children:

1) Provide Your Children with Their Own Allowances

Introducing your children to the concept of budgeting will empower them to make wise financial decisions well before they earn their own money. To help them conceptualize the idea of a budget and how to manage limited resources by themselves, give each of them an allowance so that they can put their very first lessons on personal finance into practice.

Control over their own allowance, even if it’s not a huge amount, will help a child understand the importance of allocating money for various purposes such as saving, spending, and giving. Further encourage your children to track their expenses and savings, and to consider using visual aids like bar or pie charts to physically represent their budget categories.

Older kids who have their own mobile phones or who can use phones with your guidance can also learn how to itemize their postpaid mobile plans. Being able to track how they use their call, SMS, and data allocations will help a child realize the costs that come with intangible expenses, and how they can ultimately maximize their resources without having to spend too much money.

2) Come Up with Savings Goals Together

One of the best ways to motivate each of your children to save, be patient with money, and plan for the long term is to determine specific savings goals with them. Help them set goals for items they desire, such as a toy or a game, by estimating the cost of each item and creating a plan for attaining the amount of money they need.
Encourage regular contributions to their savings, and celebrate milestones along the way to encourage them to keep it up. Aside from helping your children work towards bigger goals, this financial management strategy is a great way to succeed at delayed gratification, which is an ability to resist impulsive purchases in favor of achieving a desired outcome.

3) Use Money Jars to Learn About Allocation

Money jars are excellent tools for teaching children how to allocate their funds effectively. For this strategy, try using different jars for saving, for spending immediately, and for giving to others. Having a tangible representation for each of these aspects of money management will allow your children to properly visualise their financial priorities.

Teach a child to distribute their allowance or income among these three jars based on their budget. As they observe the growth of their savings jar, they’ll eventually learn the rewards of disciplined saving. In addition, encourage your child to periodically assess whether they need to adjust their strategies for allocating money, for example by slightly increasing the amount they have in their “to spend” jar for something they really want. This will teach them the importance of evaluating their financial decisions.

4) Take Your Children Grocery Shopping with You

Another way to help your children develop financial discipline and smart consumer habits is to take them grocery shopping, where they’ll be able to see the costs of goods on their labels. Take your kids along and explain the value of comparing prices, seeking discounts, and making cost-effective choices.

Moreover, let them contribute ideas and actively participate in decision-making. This should nurture their understanding of value for money and the importance of making informed purchasing decisions. Over time, this experience will help them gain confidence in their ability to identify good deals and differentiate between their wants and needs.

5) Let Your Children Engage in Entrepreneurial Activities

If they’re old enough and if they have the appropriate avenue to do so, let your children participate in entrepreneurial activities like bake sales or making crafts to sell to friends, family members, schoolmates, or neighbours. They can also offer simple services, like helping out with cleaning, with your supervision and guidance.
Through this experience, they can learn responsibility, how to practise an entrepreneurial mindset, the value of hard work, and the importance of delivering quality services or products. Help them tally their income as well as their expenses, if any, and emphasise the need to reinvest profits or save a portion for future ventures.

6) Make Use of Financial Literacy Games and Apps

Today, you’ll find a multitude of online references that you can use to enrich your children’s financial education. Utilise interactive financial literacy games and apps designed for children to enhance their understanding of money management concepts.

You can also explore age-appropriate platforms that engage children in activities like budgeting, saving, and investing. These tools make learning about finances enjoyable and practical, helping children develop essential financial skills in a fun and interactive manner.

7) Instil the Value of Charity and Giving

Don’t forget to teach your children about the value of giving back as well as saving for themselves. This will instil empathy and a sense of social responsibility in them. You can discuss the impact of donating and the joy of helping others, and encourage them to try contributing to or volunteering for causes that they care about.
Kids should learn that money can be used not only for personal gain, but also for making a positive difference in the community. As such, it would do the whole family a lot of good to learn about and practise altruism together in the spirit of achieving financial discipline and good money management habits.

8) Carry Out Open Discussions About Money

Lastly, an environment that welcomes open discussions about money within the family nurtures financial literacy and responsible decision-making. Engage your children in age-appropriate conversations about money, budgeting, and financial responsibilities, and involve them in financial decision-making processes by explaining the reasons behind your choices.

Let them ask questions, share their thoughts, and express their own financial goals, too. Open dialogue and a positive learning environment will empower your children to develop a deeper understanding of financial concepts and, in the future, manage their finances effectively and confidently.

As demonstrated from the insights above, instilling financial discipline in your children’s lives from an early age will help you equip them with invaluable skills that will serve them throughout their lives. Remember, too, that teaching financial responsibility is not a one-time lesson, but a continuous journey. Be consistent in your practice of good financial management, and as a parent, do your best to serve as a paragon of financial discipline for your children.