Are you a parent of a kid? Do you want to know how you can teach wealth creation strategies to your child?
If your child can know how to create wealth as a kid, there is likely-hood that he or she will grow to become a wealthy person in life.
Is it not all a parent will wish for his or her kid?
In this article, I have tried to outline some steps you can follow to help your kid develop an attitude for wealth creation that will help him or her now as a kid and later as an adult.
They are basic things you can do at home with your kid.
The following are simple things you can do at home to teach your child wealth creation.
1. Teach Your Kid How To Earn
As a parent, you expect your kid to clean his or her room, help with the dishes, and do other daily chores at home.
You can consider offering your child the chance to make extra money by helping you organize the garage, washing the windows, or taking on another job that goes beyond the routine.
If your child is being paid for extra work, it will help instill good habits and give your child more control over saving and spending.
Read this article to know how to make your child earn 6 Ways To Teach Your Child To Be Business Minded.
2. Teach Your Child Saving Money
You should help to discover the benefits of delayed gratification.
Do not be quick to buy the things that your child demands from you, even if you have the money.
Delay such requests by the suggestion of saving money to buy it.
For example, if there is a toy or a game your child has his or her eyes on.
Suggest your child forgo spending his or her allowance on ice cream or another immediate pleasure and instead save for a few weeks to able to buy the toy.
3. Teach Your Child To Budget For All His Or Her Spending
Giving allowance to your child can be a great first step in showing your kid how to manage money.
You might give money every week to your child, at two-week intervals for preteens and monthly for teenagers.
Teach your child to know to apportion his or her allowance to the most important things he or she needs first.
Let your child know the difference between needs and wants.
4. Teaching Your Child Money Management
If your child spends his or her entire allowance right away, resist requests for more money before the next allowance is due.
You should stand to your feed and allow your child to go through the pains of lack because there is a great lesson to learn when he or she does not have money to buy what he or she wants.
If you talk with your kid about how to do better the next time around, he or she will start making smarter choices.
Gradually spreading out the timing of giving allowance to your kid will help your kid understand the need to manage his or her spending.
Read 7 Steps To Teach Your Child Handling Money to know about helping your child handling money.
5. Teach Your Child The Act Of Charity
Talk your child about giving out things to others that do not have as much as your kid has.
Let your kid know about charitable gifts.
Teach your kid to give out things to destitute, homeless, etc.
This will create a mind of love for your child and bring a blessing on his or her income.
Talk to your kid about organizations he or she might like to support, then earmark part of his or her allowance for donations to those causes.
The Following Are Age-Grade Activities You Can Teach Your Child Wealth Creation
1. Teaching Your Ages 3-5 Kid Wealth Creation
Delayed gratification: Teach Your Kid How To Wait Patiently For Something He Or She Likes.
The ability to delay gratification can predict how successful one will be as a grown-up.
You need to teach your kid the need to wait and save to buy something he or she wants.
What you teach your kid at this age can stay on for use by your kid later on life.
Therefore it is good you start the lessons early so that your child will become acquainted with it early.
Activities To Teach Your Kid Wealth Creation At Age 3-5
You may go into a store, and your kid saw something he or she likes and wants you to buy.
If you say you don’t have money for it, your kid may be smart knowing that you have credit cards.
If your child wants to insist on the things he or she wants.
You will say you were there to buy a specific thing today and not what your kid wants.
You will only buy what your kid wants when you come next time specifically to buy such a thing
When you do like this, expect a backlash of cries from your kid.
But you must stand your ground and refuse to buy it even if you have the money, to drive the lesson to your kid.
Another thing you can do is whenever your child is waiting in line, say, to him or her go on the swings.
Discuss how important it is to learn to wait for what he or she wants.
You can also get three jars and labeled them “Saving,” “Spending” or “Sharing.”
The saving jar should have the biggest share, like 50% of all that your child earns while spending and sharing can be 30% and 20% respectively.
This is to encourage a saving culture early in your child.
Whenever your child receives money, whether for doing chores or from a birthday, divide the money equally among the jars.
You can have him or her use the spending jar for small purchases, like chocolates, or stickers.
Your child can use the money in the sharing jar for someone you know needs it or donate to a friend’s cause.
When your child needs to buy a more expensive item he or she will visit the saving jar.
You can have your child set a goal, such as buying a toy.
Let the item not be too costly for your kid to afford after one or two weeks of saving, because a child cannot wait long as adults.
Your child may be frustrated and begin to pester you around.
The idea is to drive a lesson to your child to save money and allow the money to become more enough to buy the things he or she wants.
It is more about him or she recognizes the importance of saving for a certain project or thing than just putting money aside for fun.
Sometimes, when your child may not have an expensive goal, you can come up with a project to help her reach it in a reasonable timeframe.
You should teach your kid to count and write down the total amount every time he or she adds money to the savings jar.
Help your child count how much he or she has.
Talk with him or her about how much he or she needs to reach his or her goal, and when he or she will reach it.
The saving activities can be fun for your kids and it can give your child a sense of the importance of waiting and being patient and saving.
Your child will be able to save so much money and be happy in doing it while learning an important wealth creation lesson
2. Teaching Your Ages 6-10 Wealth Creation
Making The Right Choice: Teach Your Kid How To Make Choices On Spending Money.
You should begin to teach your kid the importance of making a wise choice in spending money.
Explain to your child that money is finite and it is important to make wise choices about what he or she needs to spend money.
Let your child learn that once he or she spends the money he or she has.
He or she will not have more to spend.
You should also keep up with activities like saving, spending and sharing jars, and setting financial targets.
At this age, you can begin to engage your child in more adult financial decision-making.
Activities To Teach Your Kid Wealth Creation At Age 6 To 10
At this age, you should include your child in some financial decisions.
Teach your child to consider value for money in choosing quality and price during purchase.
For instance, you should explain the reason you chose the generic item rather than the brand name is that it costs less and tastes the same.
You can also teach your child that buying everyday staples like paper towels in bulk to get a cheaper per-item price.
The idea is to teach your child to learn how to bargain for the best price for the right item.
Involve your child in making choices for purchase by giving your child some money in a supermarket and have your child make choices about what to buy, within the parameters of what you need.
This activity will give your child the experience of making choices with money.
Teach your kid how to make financial decisions while you go shopping.
Explain how you are making your financial decisions as a grown-up by considering different issues.
What you want to buy is it something you need or it is just a want that you live without it.
You can consider which one is economical, whether to buy or rent such an item.
Another thing you can consider, is the price at the different places, whether you can get cheaper in another place, like a discount store.
3. Teaching Your Ages 11-13 Kid Wealth Creation
Long Term Saving: Teach Child To Save Long Term And Grow Compound Interest.
You can shift from the idea of saving for short-term goals to long-term goals as you teach your child wealth creation at this age.
Introduce the concept of compound interest to your kid.
Let him or she knows that when he or she know that compound interest is when he or she earns interest both on his or her savings.
As well as on past interest from his or her savings.
Read How To Teach Your Preteen Handling Money to know how to handle your preteen finances
Activities To Teach Your Kid Wealth Creation At Age 11 To 13
If you want to teach compound interest, you should describe it using specific numbers.
This is because research shows this is more effective than describing it in the abstract.
You can use Investor.gov. to teach your child how to do some compound interest calculations.
Here, your child can see how much money he or she’ll earn if she invests a certain amount and it grows by a certain interest rate.
Let your child set a longer-term goal for something more expensive than the toys he or she may have been saving for.
Your child should learn what is called opportunity costs is, that they are the things he or she is giving up to save money.
This is the age-grade that kids become more spending culture than saving.
You will have a lot of work to do to convince your child to save the money he or she used to buy snacks to buy the shoe he or she wants.
Help your child to think of what long-term goals are and what he or she will have to give up shows that it is a good decision.
This is because thinking long-term goals is what will help your child create wealth in the future.
4. Teaching Your Ages 14-18 Kid Wealth Creation
Consider The Best Education: You Should Be Involved In Selecting The Best College According To What You Can Afford For Your Kid
You should be involved in the search for the “net price calculator” on college websites to see how much each cost when including other expenses besides tuition.
As you do that, keep your mind on getting the best education for your child and don’t let the price tag discourage your child.
Let your child know the importance of going to college by explaining how much more college graduates earn than those without college degrees.
Thus, making it a worthwhile investment.
Read How To Teach Your Teen Handling Money to know how to guide your teenage child in financial management.
Activities To Teach Your Kid Wealth Creation At Age 14 To 18
You should discuss how much you could contribute to your child’s college education each year.
Tackling the subject early and being honest about what your family can afford will help your kid be realistic about where your kid may apply for college.
You should also consider other options to finance college other than with your own money.
Let your child look into which private schools are generous with financial aid.
How much of it is in grants and scholarships.
Consider how much in loans that your child will have to pay back.
And what government programs can help pay back those loans.
If your child is good in any sport that will help your child get sponsorship or scholarship you may want to try that option too.
Your child can also use this College Scorecard to compare how much each college costs, what the employment prospects of graduates are.
He or she will be able to know how much student loan debt could affect your child’s lifestyle after graduation if he or she attended that college.
You should analyze together whether the money put in will pay off when your child finally graduates.
You can estimate your financial aid using the FAFSA4caster tool at fafsa.ed.gov.
You can also take time to research additional loans, scholarships, and grants, using calculators to estimate monthly loan payments on studentaid.ed.gov.
There you can find out about loan repayment options such as Pay As You Earn.
Which limits your monthly payments to just 10% of your discretionary income.
As a parent, you should encourage your kid to take a part-time job.
Research by Dr. Gary R. Pike of Indiana University-Purdue University Indianapolis shows that students who work 20 hours a week or less at on-campus jobs get better grades because they are more engaged in student life.
However, your child should not overwork himself or herself on the campus as this can hurt his or her academic work.
4. Teaching Your Ages Ages 18+ Kid Wealth Creation
Use Of Credit Cards: Teach Your Kid How To Manage Credit Card
Teach your child to learn to only use his or her credit card to get the amount he or she could pay off at the end of the month.
This will help your child remove the burden of paying off credit card debt at the same time as student loans.
Let your child know that credit card debt could affect his or her credit history, which could make it difficult to buy a car or a home or even to get a job later in life.
This is because sometimes, prospective employers check credit rating before offering jobs to applicants.
In the US today, the average household owes $7,084 in credit card debt.
Therefore teach your child to learn how to spend his or her means and not rack up hundreds of dollars a year in interest.
This is critical that you will have to teach your kid how to use credit cards responsibly or your child should avoid credit cards entirely.
When you teach your child credit card management, you are teaching him or her a great wealth creation lesson.
Activities To Teach Your Kid Wealth Creation At Age Ages 18+
Teach a child that if you as a parent cosigns on his or her credit card, any late payment could also affect your credit card credit history.
Therefore, your child should be mindful of how he or she uses the credit card so as not to bring the entire family to bankruptcy.
You should explain to your child that it is important not to charge everyday items so that way if he or she has an emergency expense that cannot be covered with savings.
He or she can change that.
However, it is better to build up at least three months’ worth of living expenses in emergency savings, though six to nine months’ worth is ideal.
This way your child credit card history will be good for future undertakings that help your child create wealth easily.
Wealth Creation is a habit that you can teach your child early in life.
If your child learns these lessons early, he or she will grow up with the right mindset on wealth creation.
Tallachi Philemon writes for Classified Messages
Tallachi Philemon, a Chemical Engineer and a Certified First Responder is the founder of Classified Messages, a platform for Achievements, Success and Wealth Creation.
He is also the owner of TALPHITECH, a web and app design and development company.
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